Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-Q**

 

**x****      QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934**

** **

**For the quarterly period ended June 30, 2010**

** **

**o****         TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of1934**

 

**For the transition period from            to            **

 

**Commission File Number 000-30833**

 

**BRUKER CORPORATION**

(Exactname of registrant as specified in its charter)

 

| **Delaware**                                                          | ** ** | **04-3110160**                              |
|-----------------------------------------------------------------------|------------|---------------------------------------------|
| (State  or other jurisdiction of  incorporation or organization) |       | (I.R.S.  Employer  Identification No.) |

 

**40 Manning Road, Billerica, MA 01821**

(Addressof principal executive offices) (Zip Code)

 

Registrant’stelephone number, including area code:**(978) 663-3660**

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  Yes  x  No  o

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12months (or for such shorter period that the registrant was required to submitand post such files).  Yes  o  No  o

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer or a smaller reporting company. See the definitions of “acceleratedfiler, large accelerated filer, smaller reporting company” in Rule 12b-2of the Exchange Act. (Check one):

 
| Large  accelerated filer o                |   | Accelerated  filer x         |
|------------------------------------------------|--------|-----------------------------------|
| Non-accelerated  filer o                  |   | Smaller  reporting company o |
| (Do  not check if a smaller reporting company) |   |                              |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes  o No  x

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

 

| **Class**                                | ** ** | **Outstanding at August 3, 2010** |
|------------------------------------------|------------|-------------------------------------------------------|
| Common  Stock, $0.01 par value per share | ** ** | **164,769,064**shares                                 |

 

 

 

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**B****RUKER CORPORATION**

 

**Quarterly Report on Form 10-Q**

**For the Quarter Ended June 30, 2010**

 

**Index**

 
| ** **       | ** ** | ** **                                                                                                                 | ** ** | **Page** |
|------------------|------------|----------------------------------------------------------------------------------------------------------------------------|------------|----------|
| **Part I**  | ** ** | **FINANCIAL  INFORMATION**                                                                                                 | 1          |
| Item 1:          |       | Unaudited  Condensed Consolidated Financial Statements                                                                     | 1          |
|             |       | Unaudited  Condensed Consolidated Balance Sheets as of June 30, 2010 and  December 31, 2009                      | 1          |
|             |       | Unaudited  Condensed Consolidated Statements of Operations for the three and six months  ended June 30, 2010 and 2009 | 2          |
|             |       | Unaudited  Condensed Consolidated Statements of Cash Flows for the six months ended  June 30, 2010 and 2009           | 3          |
|             |       | Notes to Unaudited Condensed Consolidated Financial  Statements                                                            | 4          |
| Item 2:          |       | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                                | 17         |
| Item 3:          |       | Quantitative and  Qualitative Disclosures About Market Risk                                                                | 34         |
| Item 4:          |       | Controls and  Procedures                                                                                                   | 35         |
| **Part II** | ** ** | **OTHER  INFORMATION**                                                                                                     | 35         |
| Item 1:          |       | Legal Proceedings                                                                                                          | 35         |
| Item 1A:         |       | Risk Factors                                                                                                               | 35         |
| Item 2:          |       | Unregistered Sales of  Equity Securities and Use of Proceeds                                                               | 36         |
| Item 3:          |       | Defaults Upon Senior  Securities                                                                                           | 36         |
| Item 4:          |       | [Removed and Reserved]                                                                                                     | 36         |
| Item 5:          |       | Other Information                                                                                                          | 36         |
| Item 6:          |       | Exhibits                                                                                                                   | 36         |
|             |       | Signatures                                                                                                                 | 37         |

 

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**PART I****               ****FINANCIAL INFORMATION**

 

**ITEM 1.****             ****UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

**(in millions, except share data)**

** **
| ** **                                                                                                                                                                                                       | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|------------------|------------|
| ** **                                                                                                                                                                                                       | ** ** | **2010**     | ** ** | **2009**         | ** ** |
| **ASSETS**                                                                                                                                                                                                       |       |         |       |             |       |
| Current  assets:                                                                                                                                                                                                 |       |         |       |             |       |
| Cash  and cash equivalents                                                                                                                                                                                       |       | $            | 187.6      |             | $          | 207.1 |   |
| Restricted  cash                                                                                                                                                                                                 |       | 2.5          |       | 2.0              |       |
| Accounts  receivable, net                                                                                                                                                                                        |       | 161.5        |       | 184.1            |       |
| Inventory                                                                                                                                                                                                        |       | 424.5        |       | 422.8            |       |
| Other  current assets                                                                                                                                                                                            |       | 58.5         |       | 57.5             |       |
| Total  current assets                                                                                                                                                                                            |       | 834.6        |       | 873.5            |       |
|                                                                                                                                                                                                             |       |         |       |             |       |
| Property,  plant and equipment, net                                                                                                                                                                              |       | 199.3        |       | 223.4            |       |
| Intangibles  and other long-term assets                                                                                                                                                                          |       | 106.6        |       | 75.1             |       |
| Total  assets                                                                                                                                                                                                    |       | $            | 1,140.5    |             | $          | 1,172.0 |   |
|                                                                                                                                                                                                             |       |         |       |             |       |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                                                                                                                                                                   |       |         |       |             |       |
| Current  liabilities:                                                                                                                                                                                            |       |         |       |             |       |
| Short-term  borrowings                                                                                                                                                                                           |       | $            | —     |             | $          | 0.1 |   |
| Current  portion of long-term debt                                                                                                                                                                               |       | 25.1         |       | 21.9             |       |
| Accounts  payable                                                                                                                                                                                                |       | 53.6         |       | 49.8             |       |
| Customer  advances                                                                                                                                                                                               |       | 212.0        |       | 219.2            |       |
| Other  current liabilities                                                                                                                                                                                       |       | 252.5        |       | 249.2            |       |
| Total  current liabilities                                                                                                                                                                                       |       | 543.2        |       | 540.2            |       |
|                                                                                                                                                                                                             |       |         |       |             |       |
| Long-term  debt                                                                                                                                                                                                  |       | 101.6        |       | 115.7            |       |
| Other  long-term liabilities                                                                                                                                                                                     |       | 83.1         |       | 97.3             |       |
| Commitments  and contingencies (Note 18)                                                                                                                                                                         |       | —       |       | —           |       |
|                                                                                                                                                                                                             |       |         |       |             |       |
| Shareholders’  Equity:                                                                                                                                                                                      |       |         |       |             |       |
| Preferred  stock, $0.01 par value 5,000,000 shares authorized, none issued or  outstanding at June 30, 2010 and December 31, 2009                                                                                |       | —       |       | —           |       |
| Common  stock, $0.01 par value 260,000,000 shares authorized,  164,786,346 and 164,384,679 shares issued  and 164,769,127 and 164,371,384 outstanding at June 30, 2010 and December 31,  2009, respectively |       | 1.6          |       | 1.6              |       |
| Treasury  stock at cost, 17,219 at June 30, 2010 and 13,295 at December 31, 2009                                                                                                                                 |       | (0.2         | )          | (0.1             | )          |
| Other  shareholders’ equity                                                                                                                                                                                 |       | 409.5        |       | 415.7            |       |
| Total  shareholders’ equity attributable to Bruker Corporation                                                                                                                                              |       | 410.9        |       | 417.2            |       |
| Noncontrolling  interest in consolidated subsidiaries                                                                                                                                                            |       | 1.7          |       | 1.6              |       |
| Total  shareholders’ equity                                                                                                                                                                                 |       | 412.6        |       | 418.8            |       |
|                                                                                                                                                                                                             |       |         |       |             |       |
| Total  liabilities and shareholders’ equity                                                                                                                                                                 |       | $            | 1,140.5    |             | $          | 1,172.0 |   |

 

*The accompanying notes are an integral part of thesestatements.*

 

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**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS**

**(in millions, except per share data)**

 
| ** **                                                                               | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|------------------------------------------------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                                                               | ** ** | **June 30,**           | ** ** | **June 30,**         | ** ** |
| ** **                                                                               | ** ** | **2010**               | ** ** | **2009**             | ** ** | **2010** | ** ** | **2009** | ** ** |
| Product  revenue                                                                         |       | $                      | 267.0      |                 | $          | 222.9 |   | $ | 511.0 |   | $ | 425.1 |   |
| Service  revenue                                                                         |       | 32.5                   |       | 28.3                 |       | 64.0 |   | 55.2 |   |
| Other  revenue                                                                           |       | 1.4                    |       | 1.3                  |       | 3.6 |   | 2.7 |   |
| Total  revenue                                                                           |       | 300.9                  |       | 252.5                |       | 578.6 |   | 483.0 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Cost  of product revenue                                                                 |       | 149.1                  |       | 125.2                |       | 283.3 |   | 236.9 |   |
| Cost  of service revenue                                                                 |       | 16.1                   |       | 16.1                 |       | 33.3 |   | 32.2 |   |
| Total  cost of revenue                                                                   |       | 165.2                  |       | 141.3                |       | 316.6 |   | 269.1 |   |
| Gross  profit                                                                            |       | 135.7                  |       | 111.2                |       | 262.0 |   | 213.9 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Operating  expenses:                                                                     |       |                   |       |                 |       |   |   |   |   |
| Selling,  general and administrative                                                     |       | 64.0                   |       | 60.4                 |       | 129.7 |   | 118.9 |   |
| Research  and development                                                                |       | 31.2                   |       | 31.1                 |       | 64.0 |   | 60.2 |   |
| Amortization  of acquisition-related intangible assets                                   |       | 0.7                    |       | 0.5                  |       | 1.1 |   | 0.9 |   |
| Other  charges (credits), net                                                            |       | 1.9                    |       | (1.0                 | )          | 2.4 |   | (0.6 | ) |
| Total  operating expenses                                                                |       | 97.8                   |       | 91.0                 |       | 197.2 |   | 179.4 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Operating  income                                                                        |       | 37.9                   |       | 20.2                 |       | 64.8 |   | 34.5 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Interest  and other income (expense), net                                                |       | (4.2                   | )          | (2.9                 | )          | (4.5 | ) | (2.8 | ) |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Income  before income taxes and noncontrolling interest in consolidated subsidiaries     |       | 33.7                   |       | 17.3                 |       | 60.3 |   | 31.7 |   |
| Income  tax provision                                                                    |       | 10.8                   |       | 4.6                  |       | 21.4 |   | 10.4 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Consolidated  net income                                                                 |       | 22.9                   |       | 12.7                 |       | 38.9 |   | 21.3 |   |
| Net  income (loss) attributable to noncontrolling interest in consolidated  subsidiaries |       | 0.3                    |       | (0.2                 | )          | 0.2 |   | — |   |
| Net  income attributable to Bruker Corporation                                           |       | $                      | 22.6       |                 | $          | 12.9 |   | $ | 38.7 |   | $ | 21.3 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Net  income per common share attributable to Bruker Corporation shareholders:            |       |                   |       |                 |       |   |   |   |   |
| Basic                                                                                    |       | $                      | 0.14       |                 | $          | 0.08 |   | $ | 0.24 |   | $ | 0.13 |   |
| Diluted                                                                                  |       | $                      | 0.14       |                 | $          | 0.08 |   | $ | 0.23 |   | $ | 0.13 |   |
|                                                                                     |       |                   |       |                 |       |   |   |   |   |
| Weighted  average common shares outstanding:                                             |       |                   |       |                 |       |   |   |   |   |
| Basic                                                                                    |       | 164.3                  |       | 163.3                |       | 164.2 |   | 163.3 |   |
| Diluted                                                                                  |       | 165.8                  |       | 164.7                |       | 165.7 |   | 164.5 |   |

 

*The accompanying notes are an integral part of thesestatements.*

 

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**BRUKER CORPORATION**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS**

**(in millions)**

 
| ** **                                                                                 | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                                                 | ** ** | **June 30,**         | ** ** |
| ** **                                                                                 | ** ** | **2010**             | ** ** | **2009** | ** ** |
| Cash  flows from operating activities:                                                     |       |                 |       |   |   |
| Consolidated  net income                                                                   |       | $                    | 38.9       |   | $ | 21.3 |   |
| Adjustments  to reconcile consolidated net income to cash flows from operating activities: |       |                 |       |   |   |
| Depreciation  and amortization                                                             |       | 14.7                 |       | 13.5 |   |
| Amortization  of deferred financing costs                                                  |       | 0.3                  |       | 0.3 |   |
| Stock-based  compensation                                                                  |       | 3.3                  |       | 3.3 |   |
| Deferred  income taxes                                                                     |       | (8.2                 | )          | (1.8 | ) |
| Gain  on bargain purchase                                                                  |       | —               |       | (2.1 | ) |
| Other  non-cash expense                                                                    |       | 2.9                  |       | 0.3 |   |
| Changes  in operating assets and liabilities:                                              |       |                 |       |   |   |
| Accounts  receivable                                                                       |       | 9.4                  |       | 40.3 |   |
| Inventories                                                                                |       | (37.6                | )          | (4.5 | ) |
| Accounts  payable                                                                          |       | 9.3                  |       | (2.3 | ) |
| Customer  advances                                                                         |       | 13.8                 |       | (4.7 | ) |
| Other  changes in operating assets and liabilities, net                                    |       | 6.3                  |       | (12.3 | ) |
| Net  cash provided by operating activities                                                 |       | 53.1                 |       | 51.3 |   |
|                                                                                       |       |                 |       |   |   |
| Cash  flows from investing activities:                                                     |       |                 |       |   |   |
| Purchases  of property, plant and equipment                                                |       | (10.7                | )          | (7.1 | ) |
| Acquisitions,  net of cash acquired                                                        |       | (37.8                | )          | (1.1 | ) |
| Net  cash used in investing activities                                                     |       | (48.5                | )          | (8.2 | ) |
|                                                                                       |       |                 |       |   |   |
| Cash  flows from financing activities:                                                     |       |                 |       |   |   |
| Repayments  of revolving lines of credit, net                                              |       | (0.4                 | )          | (35.8 | ) |
| Repayment  of term debt                                                                    |       | (9.9                 | )          | (15.9 | ) |
| Changes  in restricted cash                                                                |       | (0.7                 | )          | (0.5 | ) |
| Issuance  of common stock under stock plans                                                |       | 2.2                  |       | 0.1 |   |
| Cash  payments to noncontrolling interests                                                 |       | (0.1                 | )          | — |   |
| Net  cash used in financing activities                                                     |       | (8.9                 | )          | (52.1 | ) |
| Effect  of exchange rate changes on cash and cash equivalents                              |       | (15.2                | )          | (4.6 | ) |
| Net  change in cash and cash equivalents                                                   |       | (19.5                | )          | (13.6 | ) |
| Cash  and cash equivalents at beginning of period                                          |       | 207.1                |       | 166.2 |   |
| Cash  and cash equivalents at end of period                                                |       | $                    | 187.6      |   | $ | 152.6 |   |

 

*The accompanying notes are an integral part of thesestatements.*

 

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**BRUKERCORPORATION**

**NOTESTO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.****             ****Description of Business**

 

Bruker Corporation and its wholly-owned subsidiaries(the “Company”) is a designer and manufacturer of proprietary life science andmaterials research systems and associated products that address the rapidlyevolving needs of a diverse array of customers in life science, pharmaceutical,biotechnology and molecular diagnostics research, as well as in materials andchemical analysis in various industries and government applications. TheCompany’s core technology platforms include X-ray technologies, magneticresonance technologies, mass spectrometry technologies, optical emissionspectroscopy and infrared and Raman molecular spectroscopy technologies. TheCompany also manufactures and distributes a broad range of field analyticalsystems for chemical, biological, radiological, nuclear and explosives, or CBRNE,detection. The Company also develops and manufactures low temperature and hightemperature superconducting wire and superconducting devices for use inadvanced magnet technology, physics research and energy applications. TheCompany maintains major technical and manufacturing centers in Europe, NorthAmerica and Japan, and has sales offices located throughout the world. TheCompany’s diverse customer base includes life science, pharmaceutical,biotechnology and molecular diagnostic research companies, academicinstitutions, advanced materials and semiconductor industries and governmentagencies.

 

Management reports results on the basis of thefollowing two segments:

 

·                  *Scientific Instruments.* The operations of this segment includethe design, manufacture and distribution of advanced instrumentation andautomated solutions based on X-ray technology, spark-optical emissionspectroscopy technology, atomic force microscopy technology, magnetic resonancetechnology, mass spectrometry technology and infrared and Raman molecularspectroscopy technology. Typical customers of the Scientific Instrumentssegment include pharmaceutical, biotechnology, and molecular diagnosticcompanies; academic institutions; medical schools; other non-profitorganizations; clinical microbiology laboratories; government departments andagencies; nanotechnology, semiconductor, chemical, cement, metals and petroleumcompanies; and food, beverage and agricultural analysis companies andlaboratories.

 

·                  *Energy &Supercon Technologies.*  The operations of this segmentinclude the development and marketing of superconducting andnon-superconducting materials and devices for growing markets in renewableenergy, energy infrastructure, healthcare and “big science” research. Thissegment supplies low temperature superconductors for use in magnetic resonanceimaging and nuclear magnetic resonance systems, fusion energy research andother applications, as well as high temperature superconductors which areprimarily used in fusion energy research. This segment also providessuperconductivity-enabled devices, such as magnets, accelerator cavities andmodules, radio frequency power couplers and linear accelerators, primarily foruse in fusion research and other scientific applications. In addition, this segmenthas a number of devices and materials under development, includingsuperconducting crystal growth magnets for photovoltaic and semiconductorapplications, inductive superconducting fault current limiters for energyinfrastructure applications and high temperature superconductors for compacthigh-power wind turbine generators and other applications. Typical customers ofthe Energy & Supercon Technologies segment include manufacturers ofmedical technology and life science analytics tools and universities anddedicated research facilities in the fields of material sciences, energy,biotechnology and proteomics, among others.

 

The financial statements represent the consolidatedaccounts of the Company. All significant intercompany accounts and transactionshave been eliminated in consolidation. The unaudited condensed consolidatedfinancial statements as of and for the three and six months ended June 30,2010 and 2009 have been prepared in accordance with accounting principlesgenerally accepted in the United States (“GAAP”) for interim financialinformation and pursuant to the rules and regulations of the Securitiesand Exchange Commission for Quarterly Reports on Form 10-Q andArticle 10 of Regulation S-X. Accordingly, the financial informationpresented herein does not include all of the information and footnotes requiredby GAAP for complete financial statements. In the opinion of management, alladjustments, consisting only of normal recurring adjustments, considerednecessary for a fair presentation have been included. The results for interimperiods are not necessarily indicative of the results expected for the fullyear. Certain prior year amounts have been reclassified to conform to thecurrent year presentation. These reclassifications had no effect on previouslyreported net income or shareholders’ equity.

 

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**2.****             ****Acquisitions**

 

On May 19, 2010, the Company completed theacquisition of three former Varian, Inc. (“Varian”), product lines whichAgilent Technologies, Inc. (“Agilent”) divested in connection withobtaining regulatory approval for its May 14, 2010 acquisition of Varian.The Company acquired certain assets and assumed certain liabilities in Varian’sinductively coupled plasma mass spectrometry instruments business, laboratorygas chromatography instruments business, and gas chromatographytriple-quadrupole mass spectrometry instruments business (collectively, the“chemical analysis business”) for cash consideration of $37.5 million. Theacquired business complements the Company’s existing mass spectrometry productsand expands the Company’s offerings to industrial and applied markets. Theacquisition of the chemical analysis business is being accounted for under theacquisition method. The Company has not yet completed the final allocation ofthe purchase price but has preliminarily allocated the considerationtransferred as follows:

 
| Inventory                      |   | $     | 13.0   |   |
|--------------------------------|--------|-------|--------|--------|
| Property, plant and  equipment |   | 2.8   |   |
| Intangible assets              |   | 9.7   |   |
| Goodwill                       |   | 22.0  |   |
| Liabilities assumed            |   | (10.0 | )      |
|                           |   | $     | 37.5   |   |

 

The allocation of the purchase price will be completedwithin the measurement period.

 

The results of the chemical analysis business havebeen included in the Scientific Instruments segment from the date ofacquisition. Pro forma financial information reflecting the acquisition of thechemical analysis business has not been presented because the impact onrevenues, net income and net income per common share attributable to BrukerCorporation shareholders is not material.

 

In April 2009, the Company acquired substantiallyall of the assets of the research instruments portion of ACCEL Instruments GmbH(the “RI business”) from Varian Medical Systems, Inc. The acquisition ofthe RI business was accounted for under the acquisition method. The RIbusiness, located in Bergisch Gladbach, Germany, consists of the developmentand manufacture of electron and ion linear accelerators, superconducting andnormal conducting accelerator cavities, insertion devices, superconductingfault current limiters, other accelerator components and specialtysuperconducting magnets for physics and energy research and a variety of otherscientific applications. The consideration transferred in acquiring the RIbusiness was approximately $0.4 million and consisted entirely of cash. TheCompany acquired approximately $2.8 million of receivables, $4.4 million ofinventory, $2.2 million of other current assets and $4.9 million of property,plant and equipment in this acquisition and assumed approximately $12.1 millionof current liabilities. The Company also recorded $0.5 million representing thefair value of a noncontrolling interest. In 2009, in connection with the acquisitionof the RI business, the Company recorded a gain of approximately $1.3 millionthat was recorded as a component of acquisition-related charges in theconsolidated statements of operations. A gain of $2.1 million was initiallyrecorded in the second quarter of 2009 based on a preliminary purchase priceallocation, but was subsequently reduced by $0.8 million in the fourth quarterof 2009 based on the final allocation. The results of the RI business have beenincluded in the Energy & Supercon Technologies segment from the dateof acquisition. Pro forma financial information reflecting the acquisition ofthe RI business has not been presented because the impact on revenues, netincome and net income per common share attributable to Bruker Corporation shareholdersis not material.

 

**3.****             ****Stock-Based Compensation**

 

The Company’s primary types of share-basedcompensation are in the form of stock options and restricted stock. The Companyrecorded stock-based compensation expense for the three and six months ended June 30,2010 and 2009 as follows (in millions):

 

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| ** **                                  | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|---------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                  | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Stock options                               |       | $                                     | 1.5        |                                | $          | 1.2 |   | $ | 2.8 |   | $ | 2.5 |   |
| Restricted stock                            |       | 0.2                                   |       | 0.3                                 |       | 0.5 |   | 0.8 |   |
| Total stock-based  compensation, pre-tax    |       | 1.7                                   |       | 1.5                                 |       | 3.3 |   | 3.3 |   |
| Tax benefit                                 |       | 0.2                                   |       | 0.2                                 |       | 0.5 |   | 0.6 |   |
| Total stock-based  compensation, net of tax |       | $                                     | 1.5        |                                | $          | 1.3 |   | $ | 2.8 |   | $ | 2.7 |   |

 

Compensation expense is amortized on a straight-linebasis over the underlying vesting terms. Stock options to purchase theCompany’s common stock are periodically awarded to executive officers and otheremployees of the Company subject to a vesting period of three to five years.The fair value of each option award is estimated on the date of grant using theBlack-Scholes option-pricing model. Assumptions regarding volatility, expectedlife, dividend yield and risk-free interest rate are required for theBlack-Scholes model and are presented in the table below:

 
| ** **              | ** ** | **2010**    | ** ** | **2009**    | ** ** |
|-------------------------|------------|-------------|------------|-------------|------------|
| Risk-free interest rate |       | 2.42%-3.46% |       | 1.71%-3.60% |       |
| Expected life           |       | 6.5 years   |       | 6.5 years   |       |
| Volatility              |       | 62.0        | %          | 64.0        | %          |
| Expected dividend yield |       | 0.0         | %          | 0.0         | %          |

 

The risk-free interest rate is the yield onzero-coupon U.S. Treasury securities for a period that is commensurate with theexpected life assumption. Expected life is determined through the simplifiedmethod as defined in the Securities and Exchange Commission Staff AccountingBulletin No. 110. The Company believes that this is the best estimate ofthe expected life of a new option. Expected volatility can be based on a numberof factors but the Company currently believes that the exclusive use ofhistorical volatility results in the best estimate of the grant-date fair valueof employee stock options because it reflects the market’s current expectationsof future volatility. Expected dividend yield was not considered in the optionpricing formula since the Company does not pay dividends and has no currentplans to do so in the future. The terms of some of the Company’s indebtednessalso currently restrict its ability to pay dividends to its shareholders.

 

***Bruker CorporationStock Plan***

 

In February 2010, the Bruker BioSciencesCorporation Amended and Restated 2000 Stock Option Plan (the “2000 Plan”)expired at the end of its scheduled ten-year term. On March 9, 2010, theCompany’s Board of Directors unanimously approved and adopted the BrukerCorporation 2010 Incentive Compensation Plan (the “2010 Plan”) and onMay 14, 2010, the 2010 Plan was approved by the Company’s stockholders.The 2010 Plan provides for the issuance of up to 8,000,000 shares of theCompany’s common stock. The Plan allows a committee of the Board of Directors(the “Committee”) to grant incentive stock options, non-qualified stock optionsand restricted stock awards. The Committee has the authority to determine whichemployees will receive the awards, the amount of the awards and other terms andconditions of the award. Awards granted by the Committee typically vest over aperiod of three to five years.

 

At June 30, 2010, the Company expects torecognize pre-tax stock-based compensation expense of $12.6 million associatedwith outstanding stock option awards granted under the Company’s stock plansover the weighted average remaining service period of 1.8 years. In addition,the Company expects to recognize additional pre-tax stock-based compensationexpense of $1.9 million associated with outstanding restricted stock awardsgranted under the Plan over the weighted average remaining service period ofone year.

 

***BrukerEnergy & Supercon Technologies Stock Plan***

 

In October 2009, the Board of Directors of BrukerEnergy & Supercon Technologies, Inc. (“BEST”), a wholly-owneddirect subsidiary of the Company, adopted the Bruker Energy & SuperconTechnologies, Inc. 2009 Stock Option Plan (the “BEST Plan”). The BEST Planprovides for the issuance of up to 1,600,000 shares of BEST common stock in connectionwith awards under the Plan. The Plan allows a committee of the BEST Board ofDirectors to grant incentive stock options and non-qualified stock options.

 

At June 30, 2010, the Company expects torecognize pre-tax stock-based compensation expense of $1.5 million associated

 

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with outstanding stock option awards granted under theBEST Plan over the weighted average remaining service period of 4.3 years.

 

**4.****             ****Earnings Per Share**

 

Net income per share is calculated by dividing netincome by the weighted-average shares outstanding during the period. Thediluted net income per share computation includes the effect of shares which wouldbe issuable upon the exercise of outstanding stock options and the vesting ofrestricted stock, reduced by the number of shares, which are assumed to bepurchased by the Company from the resulting proceeds at the average marketprice during the period.

 

The following table sets forth the computation ofbasic and diluted average shares outstanding for the three and six months endedJune 30, 2010 and 2009 (in millions, except per share amounts):

 
| ** **                                                                    | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|-------------------------------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                    | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Net income attributable  to Bruker Corporation                                |       | $                                     | 22.6       |                                | $          | 12.9 |   | $ | 38.7 |   | $ | 21.3 |   |
|                                                                          |       |                                  |       |                                |       |   |   |   |   |
| Weighted average shares  outstanding:                                         |       |                                  |       |                                |       |   |   |   |   |
| Weighted average shares  outstanding-basic                                    |       | 164.3                                 |       | 163.3                               |       | 164.2 |   | 163.3 |   |
| Effect of dilutive securities:                                                |       |                                  |       |                                |       |   |   |   |   |
| Stock options and  restricted stock                                           |       | 1.5                                   |       | 1.4                                 |       | 1.5 |   | 1.2 |   |
|                                                                          |       | 165.8                                 |       | 164.7                               |       | 165.7 |   | 164.5 |   |
|                                                                          |       |                                  |       |                                |       |   |   |   |   |
| Net income per common  share attributable to Bruker Corporation shareholders: |       |                                  |       |                                |       |   |   |   |   |
| Basic                                                                         |       | $                                     | 0.14       |                                | $          | 0.08 |   | $ | 0.24 |   | $ | 0.13 |   |
| Diluted                                                                       |       | $                                     | 0.14       |                                | $          | 0.08 |   | $ | 0.23 |   | $ | 0.13 |   |

 

Stock options to purchaseapproximately 0.4 million shares and 3.3 million shares were excluded from thecomputation of diluted earnings per share in the three months endedJune 30, 2010 and 2009, respectively, and approximately 0.4 million sharesand 3.5 million shares were excluded from the computation of diluted earningsper share in the six months ended June 30, 2010 and 2009, respectively,because the exercise price of the stock options exceeded the average market priceof the Company’s common stock and, as a result, would have had an anti-dilutiveeffect.

 

**5.****             ****Fair Value of FinancialInstruments**

 

The Company applies the following hierarchy, whichprioritizes the input used to measure fair value into three levels and basesthe categorization within the hierarchy upon the lowest level of input that isavailable and significant to the fair value measurement. The three levelsare defined as follows:

 

*Level 1:**    *Inputsto the valuation methodology are quoted prices (unadjusted) for identicalassets or liabilities in active markets.

 

*Level 2:**    *Inputsto the valuation methodology include quoted prices for similar assets andliabilities in active markets, and inputs that are observable for the asset orliability, either directly or indirectly, for substantially the full term ofthe financial instrument.

 

*Level 3:**    *Inputsto the valuation methodology are unobservable and significant to the fair valuemeasurement.

 

The Company measures the following financial assetsand liabilities at fair value on a recurring basis. The fair value of thesefinancial assets and liabilities was determined using the following inputs atJune 30, 2010 (in millions):

 

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| ** **                                                | ** ** | ** ** | ** ** | **Quoted  Prices  in Active  Markets  Available** | ** ** | **Significant  Other  Observable  Inputs** | ** ** | **Significant  Unobservable  Inputs** | ** ** |
|-----------------------------------------------------------|------------|------------|------------|---------------------------------------------------|------------|--------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                | ** ** | **Total**  | ** ** | **(Level  1)**                                    | ** ** | **(Level  2)**                             | ** ** | **(Level  3)**                        | ** ** |
| Assets:                                                   |       |       |       |                                              |       |                                       |       |                                  |       |
| Cash equivalents                                          |       | $          | 93.1       |                                              | $          | 93.1                                       |       | $                                     | —     |   | $ | — |   |
| Embedded Derivatives in  Purchases and Delivery Contracts |       | 0.3        |       | —                                            |       | 0.3                                        |       | —                                |       |
| Total assets recorded  at fair value                      |       | $          | 93.4       |                                              | $          | 93.1                                       |       | $                                     | 0.3        |   | $ | — |   |
|                                                      |       |       |       |                                              |       |                                       |       |                                  |       |
| Liabilities:                                              |       |       |       |                                              |       |                                       |       |                                  |       |
| Interest rate swap                                        |       | $          | 3.7        |                                              | $          | —                                     |       | $                                     | 3.7        |   | $ | — |   |
| Embedded derivatives in  purchase and delivery contracts  |       | 4.1        |       | —                                            |       | 4.1                                        |       | —                                |       |
| Foreign exchange  contracts                               |       | 1.3        |       | —                                            |       | 1.3                                        |       | —                                |       |
| Total liabilities  recorded at fair value                 |       | $          | 9.1        |                                              | $          | —                                     |       | $                                     | 9.1        |   | $ | — |   |

 

The Company’s financial instruments consist primarilyof cash equivalents, derivative instruments consisting of forward contracts,options and an interest rate swap, accounts receivable, short-term borrowings,accounts payable and long-term debt. The carrying amounts of the Company’s cashequivalents, accounts receivable, short-term borrowings and accounts payableapproximate fair value due to their short-term nature. Derivative assets andliabilities are measured at fair value on a recurring basis. The fair value ofderivative instruments is based on quotes received from third party banks.These values represent the estimated amount the Company would receive or pay toterminate the agreements taking into consideration current foreign exchange orinterest rates, as well as the creditworthiness of the counterparty. TheCompany’s long-term debt consists primarily of variable rate arrangements withinterest rates that reset every three months and, as a result, reflect currentinterest rates. Consequently, the carrying value of the Company’s long-termdebt approximates fair value.

 

**6.****             ****Inventories**

 

Inventories consisted of the following as ofJune 30, 2010 and December 31, 2009 (in millions):

 
| ** **          | ** ** | **June 30,  2010** | ** ** | **December 31,  2009** | ** ** |
|---------------------|------------|-------------------------|------------|-----------------------------|------------|
| Raw materials       |       | $                       | 115.2      |                        | $          | 108.8 |   |
| Work-in-process     |       | 149.6                   |       | 134.6                       |       |
| Demonstration units |       | 40.7                    |       | 41.3                        |       |
| Finished goods      |       | 119.0                   |       | 138.1                       |       |
| Inventories         |       | $                       | 424.5      |                        | $          | 422.8 |   |

 

The Company reduces the carrying value of itsdemonstration inventories for differences between its cost and estimated netrealizable value through a charge to cost of revenue that is based on a numberof factors including the age of the unit, the physical condition of the unitand an assessment of technological obsolescence. Amounts recorded in cost ofproduct revenue related to the write-down of demonstration units to netrealizable value were $5.6 million and $6.1 million for the three months endedJune 30, 2010 and 2009, respectively and $11.2 million and $11.9 millionfor the six months ended June 30, 2010 and 2009, respectively.

 

Finished goods include in-transit systems that havebeen shipped to the Company’s customers but have not yet been installed andaccepted by the customer. As of June 30, 2010 and December 31, 2009,inventory-in-transit was $57.7 million and $80.8 million, respectively.

 

**7.****             ****Goodwill and Other Intangible Assets**

 

The following table sets forth the changes in thecarrying amount of goodwill for the six months ended June 30, 2010 (inmillions):

 

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| Balance at December 31, 2009    |   | $    | 47.5   |   |
|--------------------------------------|--------|------|--------|--------|
| Goodwill acquired  during the period |   | 22.3 |   |
| Foreign currency impact              |   | (3.6 | )      |
| Balance at  June 30, 2010       |   | $    | 66.2   |   |

 

Goodwill is not amortized, instead, goodwill is testedfor impairment on a reporting unit basis annually, or on an interim basis whenevents or changes in circumstances warrant. The Company performed its annualtest for impairment as of December 31, 2009 and determined that goodwilland other intangible assets were not impaired at that time. The Company did notidentify any indicators of impairment during the six month period endedJune 30, 2010.

 

The following is a summary of other intangible assetssubject to amortization at June 30, 2010 and December 31, 2009 (inmillions):

 
| ** **                                      | ** ** | **June 30,  2010**     | ** ** | **December 31,  2009**   | ** ** |
|-------------------------------------------------|------------|-----------------------------|------------|-------------------------------|------------|
| ** **                                      | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Net  Carrying  Amount** | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Net  Carrying  Amount** | ** ** |
| Existing technology and  related patents        |       | $                           | 19.4       |                          | $          | (11.4 | ) | $ | 8.0 |   | $ | 14.4 |   | $ | (10.7 | ) | $ | 3.7 |   |
| Customer relationships                          |       | 5.9                         |       | (1.4                          | )          | 4.5 |   | 2.0 |   | (0.9 | ) | 1.1 |   |
| Trade names                                     |       | 0.7                         |       | (0.3                          | )          | 0.4 |   | 0.4 |   | (0.3 | ) | 0.1 |   |
| Intangible assets  subject to amortization, net |       | $                           | 26.0       |                          | $          | (13.1 | ) | $ | 12.9 |   | $ | 16.8 |   | $ | (11.9 | ) | $ | 4.9 |   |

 

For the three months ended June 30, 2010 and2009, the Company recorded amortization expense of $0.7 million and $0.5million, respectively, related to intangible assets subject to amortization.For the six months ended June 30, 2010 and 2009, the Company recordedamortization expense of $1.2 million and $0.9 million, respectively, related tointangible assets subject to amortization.

 

**8.****             ****Debt**

 

At June 30, 2010 and December 31, 2009, theCompany’s debt obligations consisted of the following (in millions):

 
| ** **                                                                                                                                                                                       | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                       | ** ** | **2010**          | ** ** | **2009**              | ** ** |
| US Dollar term loan  under the Credit Agreement                                                                                                                                                  |       | $                 | 121.9      |                  | $          | 131.3 |   |
|                                                                                                                                                                                             |       |              |       |                  |       |
| Euro bank loans at  fixed rate of 2.95%, collateralized by land and buildings of Bruker Daltonik  GmbH, quarterly principal payments and monthly interest payments due and  payable through 2010 |       | —            |       | 0.3                   |       |
|                                                                                                                                                                                             |       |              |       |                  |       |
| Capital lease  obligations                                                                                                                                                                       |       | 4.8               |       | 6.0                   |       |
| Total long-term debt                                                                                                                                                                             |       | 126.7             |       | 137.6                 |       |
| Current portion of  long-term debt                                                                                                                                                               |       | (25.1             | )          | (21.9                 | )          |
| Total long-term debt,  less current portion                                                                                                                                                      |       | $                 | 101.6      |                  | $          | 115.7 |   |

 

In 2008, the Company entered into a credit agreementwith a syndication of lenders (the “Credit Agreement”) which provides for arevolving credit line with a maximum commitment of $230.0 million and a termfacility of $150.0 million. The outstanding principal and interest under theterm loan is payable in quarterly installments through December 2012.Borrowings under the Credit Agreement bear interest, at the Company’s option,at either (i) the higher of the prime rate or the federal funds rate plus0.50%, or (ii) adjusted LIBOR, plus margins ranging from 0.40% to 1.25%and a facility fee ranging from 0.10% to 0.20%. As of June 30, 2010, theweighted average interest rate of borrowings under the term facility of theCredit Agreement was approximately 2.7%.

 

Borrowings under the Credit Agreement are secured bythe pledge to the banks of 100% of the capital stock of each of the Company’swholly-owned domestic subsidiaries and 65% of the capital stock of certain ofthe Company’s direct or indirect wholly-owned foreign subsidiaries. The CreditAgreement also requires the Company to maintain certain financial ratiosrelated to leverage ratios and interest coverage ratios as defined in theCredit Agreement. In addition to the financial ratios, the

 

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Credit Agreement restricts, among other things, theCompany’s ability to do the following: make certain payments; incur additionaldebt; incur certain liens; make certain investments, including derivativeagreements; merge, consolidate, sell or transfer all or substantially all ofthe Company’s assets; and enter into certain transactions with affiliates. Asof June 30, 2010, the latest measurement date, the Company was incompliance with the covenants under the Credit Agreement.

 

In addition to its long-term arrangements, the Companyhad the following amounts outstanding under revolving loan arrangements:

 
| ** **                                  | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2010**          | ** ** | **2009**              | ** ** |
| Revolving loans under  the Credit Agreement |       | $                 | —     |                  | $          | — |   |
| Other revolving loans                       |       | —            |       | 0.1                   |       |
| Total short-term  borrowings                |       | $                 | —     |                  | $          | 0.1 |   |

 

The following is a summary of the maximum commitmentsand net amounts available to the Company under revolving loans as ofJune 30, 2010 (in millions):

 
| ** **            | ** ** | **Weighted  Average  Interest Rate** | ** ** | **Total  Amount  Committed by  Lenders** | ** ** | **Outstanding  Borrowings** | ** ** | **Outstanding  Letters of  Credit** | ** ** | **Total  Amount  Available** | ** ** |
|-----------------------|------------|--------------------------------------|------------|------------------------------------------|------------|-----------------------------|------------|-------------------------------------|------------|------------------------------|------------|
| Credit Agreement      |       | —                               | %          | $                                        | 230.0      |                        | $          | —                              |       | $                            | 1.4        |   | $ | 228.6 |   |
| Other revolving loans |       | —                               | %          | 90.7                                     |       | —                      |       | 76.5                                |       | 14.2                         |       |
| Total revolving loans |       |                                 |       | $                                        | 320.7      |                        | $          | —                              |       | $                            | 77.9       |   | $ | 242.8 |   |

 

Other revolving loans are with various financialinstitutions located primarily in Germany, Switzerland and France. TheCompany’s other revolving lines of credit are typically due upon demand withinterest payable monthly. Certain of these lines of credit are unsecured whileothers are secured by the accounts receivable and inventory of the relatedsubsidiary.

 

**9.****             ****Derivative Instruments and HedgingActivities**

 

**Interest Rate Risks**

 

The Company’s exposure to interest rate risk relatesprimarily to outstanding variable rate debt and adverse movements in therelated short-term market rates. The most significant component of theCompany’s interest rate risk relates to amounts outstanding under the CreditAgreement. In April 2008, the Company entered into an interest rate swaparrangement to manage its exposure to interest rate movements and the relatedeffect on its variable rate debt. Under this interest rate swap arrangement,the Company will pay a fixed rate of approximately 3.8% and receive a variablerate based on three month LIBOR. The initial notional amount of this interestrate swap was $90.0 million and it amortizes in proportion to the term debtcomponent of the Credit Agreement through December 2012. At June 30,2010, the notional amount of this interest rate swap was $73.1 million. TheCompany concluded that this swap met the criteria to qualify as an effectivehedge of the variability of cash flows of the interest payments and accountsfor the interest rate swap as a cash flow hedge. Accordingly, the Companyreflects changes in the fair value of the effective portion of this interestrate swap in accumulated other comprehensive income, a component ofshareholders’ equity. As of June 30, 2010 and December 31, 2009, theCompany recorded a liability of $3.7 million and $3.5 million, respectively,related to the fair value of the interest rate swap that is recorded in othercurrent liabilities in the consolidated balance sheets. Amounts recorded inaccumulated other comprehensive income (loss) are reclassified to interest andother income (expense), net in the consolidated statement of operations wheneither the forecasted transaction occurs or it becomes probable that theforecasted transaction will not occur. The Company expects $2.2 million of theaccumulated loss to be reclassified into earnings over the next twelve months.

 

**Foreign Exchange Rate Risk Management**

 

The Company generates a substantial portion of itsrevenues and expenses in international markets, principally Europe and Japan,which subjects its operations to the exposure of exchange rate fluctuations.The impact of currency exchange rate movement can be positive or negative inany period. The Company, from time to time, has entered into foreign currencycontracts in order to minimize the volatility that fluctuations in currencyexchange rates have on the Company’s cash flows

 

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related to purchases and sales denominated in foreigncurrencies.

 

The Company periodically enters into foreign currencycontracts, primarily forward and option contracts, to minimize the volatilitythat fluctuations in currency exchange rates have on the Company’s cash flowsrelated to purchases and sales denominated in foreign currencies. Under thesearrangements, the Company typically agrees to purchase a fixed amount of aforeign currency in exchange for a fixed amount of U.S. Dollars or other currencieson specified dates with maturities of less than two years. These transactionsdo not qualify for hedge accounting and, accordingly, the instrument isrecorded at fair value with the corresponding gains and losses recorded ininterest and other income (expense), net in the consolidated statements ofoperations. At June 30, 2010, and December 31, 2009, the followingforeign currency contracts were outstanding:

 
| ** **   | ** ** | ** **   | ** ** | **Notional  Amount**    | ** ** |
|--------------|------------|--------------|------------|-------------------------|------------|
| **Buy**      | ** ** | **Sell**     | ** ** | **June 30,  2010** | ** ** | **December 31,  2009** | ** ** |
| Euro         |       | U.S. Dollars |       | $                       | 20.8       |   | $ | 5.5 |   |
| Swiss Francs |       | U.S. Dollars |       | 12.6                    |       | 13.1 |   |
| Japanese Yen |       | Euro         |       | 0.1                     |       | — |   |
| U.S. Dollars |       | Euro         |       | —                  |       | 6.7 |   |
|         |       |         |       | $                       | 33.5       |   | $ | 25.3 |   |

 

In addition, the Company periodically enters intopurchase and sales contracts denominated in currencies other than the functionalcurrency of the parties to the transaction. The Company accounts for thesetransactions separately valuing the “embedded derivative” component of thesecontracts. The contracts, denominated in currencies other than the functionalcurrency of the transacting parties, amounted to $35.8 million for the deliveryof products and $0.2 million for the purchase of products at June 30, 2010and $30.4 million for the delivery of products and $0.2 million for thepurchase of products at December 31, 2009. The changes in the fair valueof these embedded derivatives are recorded in interest and other income(expense), net in the consolidated statements of operations.

 

The fair value of the foreign exchange derivativeinstruments described above is recorded in our consolidated balance sheets forthe periods ended June 30, 2010 and December 31, 2009 as follows (inmillions):

 
| ** **                                               | ** ** | ** **                  | ** ** | **Fair  Value**         | ** ** |
|----------------------------------------------------------|------------|-----------------------------|------------|-------------------------|------------|
| ** **                                               | ** ** | **Balance  Sheet Location** | ** ** | **June 30,  2010** | ** ** | **December 31,  2009** | ** ** |
| Derivative assets:                                       | ** ** | ** **                  |       |                    | ** ** | ** ** | ** ** |
| Embedded derivatives in  purchase and delivery contracts |       | Other current assets        |       | $                       | 0.3        |   | $ | — |   |
| Foreign exchange  contracts                              |       | Other current assets        |       | —                  |       | — |   |
| ** **                                               | ** ** | ** **                  | ** ** | ** **              | ** ** | ** ** | ** ** |
| Derivative liabilities:                                  | ** ** | ** **                  |       |                    |       |   |   |
| Interest rate swap  contract                             |       | Other current  liabilities  |       | $                       | 3.7        |   | $ | 3.5 |   |
| Embedded derivatives in  purchase and delivery contracts |       | Other current  liabilities  |       | 4.1                     |       | 1.5 |   |
| Foreign exchange  contracts                              |       | Other current  liabilities  |       | 1.3                     |       | — |   |

 

The losses recognized in other comprehensive incomerelated to the effective portion of the interest rate swap designated as a hedginginstrument for the three and six months ended June 30, 2010 and 2009 areas follows (in millions):

 
| ** **                   | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                   | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Interest rate swap  contract |       | $                                     | (0.6       | )                                   | $          | 0.5 |   | $ | (1.5 | ) | $ | 0.1 |   |
|                              |            |                                       |            |                                     |            |  |  |  |  |  |  |  |  |

 

The losses related to the effective portion of theinterest rate swap designated as a hedging instrument that were reclassifiedfrom other comprehensive income and recognized in net income for the three andsix months ended June 30, 2010 and 2009 are as follows (in millions):

 

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| ** **                   | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                   | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Interest rate swap  contract |       | $                                     | (0.7       | )                                   | $          | (0.6 | ) | $ | (1.4 | ) | $ | (1.1 | ) |
|                              |            |                                       |            |                                     |            |  |  |  |  |  |  |  |  |

 

The Company did not recognize any amounts related toineffectiveness in the results of operations for the three and six months endedJune 30, 2010 and 2009.

 

The impact on net income of changes in the fair valueof derivative instruments not designated as hedging instruments for the threeand six months ended June 30, 2010 and 2009 are as follows (in millions):

 
| ** **                                               | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|----------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                               | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Foreign exchange  contracts                              |       | $                                     | (1.1       | )                                   | $          | (0.3 | ) | $ | (1.3 | ) | $ | — |   |
| Embedded derivatives in  purchase and delivery contracts |       | (1.6                                  | )          | (1.0                                | )          | (2.3 | ) | 0.6 |   |
| Income (expense), net                                    |       | $                                     | (2.7       | )                                   | $          | (1.3 | ) | $ | (3.6 | ) | $ | 0.6 |   |

 

The amounts recorded in the results of operationsrelated to derivative instruments not designated as hedging instruments arerecorded in interest and other income (expense), net.

 

**10.****      ****Other Charges (Credits), Net**

 

The components of other charges (credits), net, wereas follows for the three and six months ended June 30, 2010 and 2009 (inmillions):

 
| ** **                                                                  | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|-----------------------------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                                                  | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
|                                                                        |       |                                  |       |                                |       |   |   |   |   |
| Acquisition-related  charges                                                |       | $                                     | 0.4        |                                | $          | 0.4 |   | $ | 0.7 |   | $ | 0.8 |   |
| Transition-related  charges incurred in connection with acquired businesses |       | 0.5                                   |       | —                              |       | 0.5 |   | — |   |
| Loss on divestiture of  businesses                                          |       | 1.0                                   |       | —                              |       | 1.0 |   | — |   |
| Restructuring charges  (Note 11)                                            |       | —                                |       | —                              |       | 0.2 |   | — |   |
| Impairment charges  (Note 12)                                               |       | —                                |       | 0.7                                 |       | — |   | 0.7 |   |
| Gain on bargain  purchase (Note 2)                                          |       | —                                |       | (2.1                                | )          | — |   | (2.1 | ) |
| Other charges  (credits), net                                               |       | $                                     | 1.9        |                                | $          | (1.0 | ) | $ | 2.4 |   | $ | (0.6 | ) |

 

**11.****      ****Restructuring Charges**

 

In the first quarter of 2010, the Company recordedrestructuring charges of $0.2 million, which related primarily to severanceincurred in connection with the closing of a production facility inHerzogenrath, Germany and relocating the associated operations. These chargeswere recorded in the Scientific Instruments segment. The Company does notexpect to incur any additional costs related to this move and expects to havemade all of the severance payments by the end of the 2010. The liability forrestructuring charges is recorded in other current liabilities in the unauditedcondensed consolidated balance sheets. The charges related to thisrestructuring reserve are as follows (in millions):

 

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| ** **                         | ** ** | **Total** | ** ** | **Severance** | ** ** |
|------------------------------------|------------|-----------|------------|---------------|------------|
| Balance at  December 31, 2009 |       | $         | —     |          | $          | — |   |
| Restructuring charges              |       | 0.2       |       | 0.2           |       |
| Cash payments                      |       | —    |       | —        |       |
| Foreign currency impact            |       | —    |       | —        |       |
| Balance at  June 30, 2010     |       | $         | 0.2        |          | $          | 0.2 |   |

 

**12.****      ****Impairment Charges**

 

In the second quarter of 2009, the Company recorded animpairment charge of $0.7 million, which consisted of certain fixed assets usedin the production of certain superconducting wire. The impairment loss wasrecorded because the Company determined that the carrying value of the assetsexceeded their fair value based on the estimated undiscounted operating cashflows generated by those assets. The impairment charge was allocated to theEnergy & Supercon Technologies segment and has been recorded as acomponent of other charges (credits), net in the unaudited condensedconsolidated statements of operations.

 

**13.****      ****Employee Benefit Plans**

 

Substantially all of the Company’s employees inSwitzerland, France and Japan, as well as certain employees in Germany, arecovered by Company-sponsored defined benefit pension plans. Retirement benefitsare generally earned based on years of service and compensation during activeemployment. Eligibility is generally determined in accordance with localstatutory requirements; however, the level of benefits and terms of vestingvaries among plans.

 

The net periodic pension cost consists of thefollowing components for the three and six months ended June 30, 2010 and2009 (in millions):

 
| ** **                                 | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|--------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                 | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Components of net  periodic benefit costs: |       |                                  |       |                                |       |   |   |   |   |
| Service cost                               |       | $                                     | 1.1        |                                | $          | 1.1 |   | $ | 2.0 |   | $ | 2.0 |   |
| Interest cost                              |       | 1.3                                   |       | 1.0                                 |       | 2.5 |   | 2.0 |   |
| Expected return on plan  assets            |       | (0.9                                  | )          | (1.0                                | )          | (1.8 | ) | (1.9 | ) |
| Amortization of prior  service costs       |       | 0.2                                   |       | —                              |       | 0.5 |   | — |   |
| Net periodic benefit  costs                |       | $                                     | 1.7        |                                | $          | 1.1 |   | $ | 3.2 |   | $ | 2.1 |   |

 

The Company made contributions of $1.3 million to itsdefined benefit plans during the six months ended June 30, 2010 andestimates contributions of $1.3 million will be made during the remainder of2010.

 

**14.****      ****Interest and Other Income (Expense), Net**

 

The components of interest and other income (expense),net, were as follows for the three and six months ended June 30, 2010 and2009 (in millions):

 
| ** **                                                | ** ** | **Three  Months Ended June 30,** | ** ** | **Six  Months Ended June 30,** | ** ** |
|-----------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
| ** **                                                | ** ** | **2010**                              | ** ** | **2009**                            | ** ** | **2010** | ** ** | **2009** | ** ** |
| Interest income                                           |       | $                                     | 0.2        |                                | $          | 0.4 |   | $ | 0.3 |   | $ | 0.8 |   |
| Interest expense                                          |       | (1.3                                  | )          | (2.1                                | )          | (2.8 | ) | (4.4 | ) |
| Exchange gains (losses)  on foreign currency transactions |       | (2.4                                  | )          | (0.7                                | )          | (1.9 | ) | 0.6 |   |
| Other                                                     |       | (0.7                                  | )          | (0.5                                | )          | (0.1 | ) | 0.2 |   |
| Interest and other  income (expense), net                 |       | $                                     | (4.2       | )                                   | $          | (2.9 | ) | $ | (4.5 | ) | $ | (2.8 | ) |

 

**15.****      ****Provision for Income Taxes**

 

The Company accounts for income taxes using the assetand liability approach by recognizing deferred tax assets and

 

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liabilities for the expectedfuture tax consequences of differences between the financial statement basisand the tax basis of assets and liabilities, calculated using enacted tax ratesin effect for the year in which the differences are expected to be reflected inthe tax return. The Company records a valuation allowance to reduce deferredtax assets to the amount that is more likely than not to be realized. In addition,the Company also accounts for uncertain tax positions that have reached aminimum recognition threshold.

 

The income tax provision forthe three months ended June 30, 2010 and 2009 was $10.8 million and $4.6million, respectively, representing effective tax rates of 32.0% and 26.6%,respectively. The income tax provision for the six months ended June 30,2010 and 2009 was $21.4 million and $10.4 million, respectively, representingeffective tax rates of 35.5% and 32.8%, respectively. The Company’s effectivetax rate generally reflects the tax provision (benefit) for non-U.S. entitiesonly, since no benefit was recognized for cumulative losses incurred in theU.S. A full valuation allowance will be maintained against all U.S. deferredtax assets, including U.S. net operating losses and tax credits, until evidenceexists that it is more likely than not that the loss carryforward and creditamounts will be utilized to offset U.S. taxable income. The Company’s tax ratemay change over time as the amount or mix of income and taxes outside the U.S.changes. The effective tax rate is calculated using projected annual pre-taxincome or loss and is affected by research and development tax credits, theexpected level of other tax benefits, the impact of changes to the valuationallowance, and changes in the mix of the Company’s pre-tax income and lossesamong jurisdictions with varying statutory tax rates and credits.

 

The Company has unrecognizedtax benefits of approximately $24.3 million as of June 30, 2010, of which$15.9 million, if recognized, would result in a reduction of the Company’seffective tax rate. The Company recognizes penalties and interest related tounrecognized tax benefits in the provision for income taxes. As of June 30,2010 and December 31, 2009, approximately $4.3 million and $3.8 million,respectively, of accrued interest and penalties related to uncertain taxpositions was included in other current liabilities on the unaudited condensedconsolidated balance sheets. Penalties and interest related to unrecognized taxbenefits in the provision for income taxes of $0.3 million and $0.2 millionwere recorded during the three months ended June 30, 2010 and 2009,respectively, and $0.5 million and $0.4 million were recorded during the sixmonths ended June 30, 2010 and 2009, respectively.

 

The Company files returns inmany foreign and state jurisdictions with varying statutes of limitations, butconsiders its significant tax jurisdictions to include the United States,Germany and Switzerland. The tax years 2003 to 2009 are open tax years in thesemajor taxing jurisdictions. One of the Company’s Swiss entities is currentlybeing audited for the tax years 2003 through 2006 and the audit is expected tobe completed during 2010. In addition, a majority of the Company’s Germansubsidiaries are under tax audit for the years 2003 through 2008. The Companycannot reasonably predict the timing or outcome of these audits.

 

**16.****      ****Accumulated Other ComprehensiveIncome (Loss)**

 

Comprehensive income (loss)refers to revenues, expenses, gains and losses that under GAAP are included inother comprehensive income, but excluded from net income as these amounts arerecorded directly as an adjustment to shareholders’ equity, net of tax. Thefollowing is a summary of comprehensive income (loss) for the three and sixmonths ended June 30, 2010 and 2009 (in millions):

 

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| ** **                                                                                             | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **                                                                                             | ** ** | **2010**                             | ** ** | **2009**                           | ** ** | **2010** | ** ** | **2009** | ** ** |
| Consolidated  net income                                                                               |       | $                                    | 22.9       |                               | $          | 12.7 |   | $ | 38.9 |   | $ | 21.3 |   |
| Foreign  currency translation adjustments                                                              |       | (30.7                                | )          | 22.7                               |       | (50.7 | ) | (3.7 | ) |
| Unrealized  gains (losses) on interest rate swap:                                                      |       |                                 |       |                               |       |   |   |   |   |
| Unrealized  holding gains (losses) arising during the period                                           |       | (0.6                                 | )          | 0.5                                |       | (1.5 | ) | 0.1 |   |
| Less  reclassification adjustments for settlements included in the determination of  net income (loss) |       | 0.7                                  |       | 0.6                                |       | 1.4 |   | 1.1 |   |
| Pension  liability adjustments                                                                         |       | 0.3                                  |       | —                             |       | 0.4 |   | 1.0 |   |
| Total  comprehensive income (loss)                                                                     |       | (7.4                                 | )          | 36.5                               |       | (11.5 | ) | 19.8 |   |
| Less:  Comprehensive income (loss) attributable to noncontrolling interests                            |       | 0.3                                  |       | (0.2                               | )          | 0.2 |   | — |   |
| Comprehensive  income (loss) attributable to Bruker Corporation                                        |       | $                                    | (7.7       | )                                  | $          | 36.7 |   | $ | (11.7 | ) | $ | 19.8 |   |

 

**17.****      ****Noncontrolling Interests**

 

Net income (loss)attributable to noncontrolling interests for the three months ended June 30,2010 and 2009 was $0.3 million and $(0.2) million, respectively. Netincome (loss) attributable to noncontrolling interests for the six months endedJune 30, 2010 and 2009 was $0.2 million and $0.0 million,respectively. The net income (loss) attributable to noncontrollinginterests represents the minority shareholders’ proportionate share of the netloss recorded by five majority-owned indirect subsidiaries, Bruker Baltic Ltd.,Bruker Labmate Pvt. Ltd., InCoaTec GmbH and Perch Solutions OY, which areincluded in the Scientific Instruments segment, and RI Research InstrumentsGmbH, which is included in the Energy & Supercon Technologies segment.

 

In the second quarter of2010, the Company sold its ownership interest in Bruker Baltic Ltd. to one ofits minority shareholders as part of its efforts to consolidate production. Inaddition, the Company made a payment of $0.1 million to the minorityshareholders of RI Research Instruments GmbH during the second quarter of 2010.

 

**18.****      ****Commitments and Contingencies**

 

***Legal***

 

Lawsuits, claims andproceedings of a nature considered normal to its businesses may be pending fromtime to time against the Company. The Company believes the outcome of theseproceedings, if any, will not have a material impact on the Company’s financialposition or results of operations. As of June 30, 2010 and December 31,2009, no accruals have been recorded for such potential contingencies.

 

***Letters of Credit and Guarantees***

 

At June 30, 2010 andDecember 31, 2009, the Company had bank guarantees of $77.9 million and$87.0 million, respectively, for its customer advances. These arrangementsguarantee the refund of advance payments received from customers in the eventthat the merchandise is not delivered in compliance with the terms of thecontract. Certain of these guarantees affect the availability of the Company’slines of credit.

 

**19.****      ****Business Segment Information**

 

The Company’s reportablesegments are organized by the types of products and services provided. TheCompany has combined the Bruker AXS, Bruker BioSpin, Bruker Daltonics andBruker Optics operating segments into the Scientific Instruments reportingsegment because each has similar economic characteristics, product processesand services, types and classes of customers, methods of distribution andregulatory environments.

 

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Management evaluates segmentoperating performance and allocates resources based on operating income (loss).The Company uses this measure because it helps provide an understanding of ourcore operating results. Selected business segment information is presentedbelow for the three and six months ended June 30, 2010 and 2009 (inmillions):

 
| ** **                               | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **                               | ** ** | **2010**                             | ** ** | **2009**                           | ** ** | **2010** | ** ** | **2009** | ** ** |
| Revenue:                                 | ** ** | ** **                           | ** ** | ** **                         | ** ** | ** ** | ** ** | ** ** | ** ** |
| Scientific  Instruments                  |       | $                                    | 284.9      |                               | $          | 241.3 |   | $ | 545.2 |   | $ | 464.9 |   |
| Energy &  Supercon Technologies |       | 18.1                                 |       | 13.7                               |       | 38.8 |   | 21.8 |   |
| Eliminations  (a)                        |       | (2.1                                 | )          | (2.5                               | )          | (5.4 | ) | (3.7 | ) |
| Total  revenue                           |       | $                                    | 300.9      |                               | $          | 252.5 |   | $ | 578.6 |   | $ | 483.0 |   |
|                                     |       |                                 |       |                               |       |   |   |   |   |
| Operating  Income (Loss):                | ** ** | ** **                           | ** ** | ** **                         | ** ** | ** ** | ** ** | ** ** | ** ** |
| Scientific  Instruments                  |       | $                                    | 40.4       |                               | $          | 20.4 |   | $ | 68.1 |   | $ | 36.5 |   |
| Energy &  Supercon Technologies |       | (1.7                                 | )          | (0.7                               | )          | (2.2 | ) | (3.1 | ) |
| Corporate,  eliminations and other (b)   |       | (0.8                                 | )          | 0.5                                |       | (1.1 | ) | 1.1 |   |
| Total  operating income                  |       | $                                    | 37.9       |                               | $          | 20.2 |   | $ | 64.8 |   | $ | 34.5 |   |

 

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(a) Representsproduct and service revenue between reportable segments.

(b) Representscorporate costs and eliminations not allocated to the reportable segments.

 

Total assets by segment asof June 30, 2010 and December 31, 2009 are as follows (in millions):

** **
| ** **                               | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **2010**          | ** ** | **2009**              | ** ** |
| Assets:                                  | ** ** | ** **        | ** ** | ** **            | ** ** |
| Scientific  Instruments                  |       | $                 | 1,120.4    |                  | $          | 1,139.7 |   |
| Energy &  Supercon Technologies |       | 59.6              |       | 70.3                  |       |
| Eliminations  and other (a)              |       | (39.5             | )          | (38.0                 | )          |
| Total  assets                            |       | $                 | 1,140.5    |                  | $          | 1,172.0 |   |

 

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(a) Assetsnot allocated to the reportable segments and eliminations of intercompanytransactions.

 

**20.****      ****Recent Accounting Pronouncements**

 

In September 2009, theEmerging Issues Task Force reached consensus on FASB Accounting StandardsUpdate 2009-14,*Software (Topic 985)—CertainRevenue Arrangements That Include Software Elements*. FASB AccountingStandards Updates 2009-14 changes the accounting model for revenue arrangementsthat include both tangible products and software elements. Under this guidance,tangible products containing software components and non-software componentsthat function together to deliver the tangible product’s essentialfunctionality are excluded from the software revenue guidance in Subtopic985-605,* Software-Revenue Recognition*. In addition, hardware componentsof a tangible product containing software components are always excluded fromthe software revenue guidance. FASB Accounting Standards Updates 2009-14 iseffective prospectively for revenue arrangements entered into or materiallymodified in fiscal years beginning on or after June 15, 2010, however,early adoption is permitted. The Company is currently assessing the impact thatthis update will have on its results of operations and financial position andwhen the Company will adopt these requirements.

 

In September 2009, theEmerging Issues Task Force reached consensus on FASB Accounting StandardsUpdate 2009-13,*Revenue Recognition (Topic605)—Multiple-Deliverable Revenue Arrangements.* FASB AccountingStandards Update 2009-13 addresses the accounting for multiple-deliverablearrangements to enable vendors to account for products or services separatelyrather than as a combined unit. Specifically, this guidance amends the criteriain Subtopic 605-25,*RevenueRecognition-Multiple-Element Arrangements,* for separatingconsideration in multiple-deliverable arrangements. This guidance establishes aselling price hierarchy for determining the selling price of a deliverable,which is based on: (a) vendor-specific objective evidence;(b) third-party evidence; or (c) estimates. This guidance alsoeliminates the residual method of allocation and requires that arrangementconsideration be allocated at the inception of the arrangement to alldeliverables using the relative selling price method. In addition, thisguidance significantly expands required disclosures related to a vendor’smultiple-deliverable revenue arrangements. FASB Accounting Standards Update2009-13 is effective prospectively for revenue arrangements entered into ormaterially modified in fiscal years beginning on or after June 15, 2010,however, early 

 

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adoption is permitted. TheCompany is currently assessing the impact that this update will have on itsresults of operations and financial position and when the Company will adoptthese requirements.

 

| **ITEM 2.** | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |
|-------------|-------------------------------------------------------------------------------------------------|

 

The following discussion ofour financial condition and results of operations should be read in conjunctionwith our interim unaudited condensed consolidated financial statements and thenotes to those statements included in Part 1, Item 1 of thisQuarterly Report on Form 10-Q, and in conjunction with the consolidatedfinancial statements contained in our Annual Report on Form 10-K for theyear ended December 31, 2009.

 

Statements contained inManagement’s Discussion and Analysis of Financial Condition and Results ofOperations, which express that we “believe,” “anticipate,” “plan,” “expect,” “seek,”“estimate,” or “should,” as well as other statements, which are not historicalfact, are forward-looking statements within the meaning of the PrivateSecurities Litigation Act of 1995. Actual events or results may differmaterially from those set forth in forward-looking statements. Certain factorsthat might cause such a difference are discussed in “Factors Affecting OurBusiness, Operating Results and Financial Condition” set forth in our AnnualReport on Form 10-K for the year ended December 31, 2009.

 

**OVERVIEW**

 

The following Management’sDiscussion and Analysis of Financial Condition and Results of Operations, orMD&A, describes the principal factors affecting the results of ouroperations, financial condition and changes in financial condition, as well asour critical accounting policies and estimates. Our MD&A is organized asfollows:

 

·                  *Executiveoverview*. This section provides a general description andhistory of our business, a brief discussion of our reportable segments,significant recent developments in our business and other opportunities,challenges we face and risks that may impact our business in the future.

 

·                  *Criticalaccounting policies*. This section discusses the accounting estimatesthat are considered important to our financial position and results ofoperations and that require us to exercise subjective or complex judgments intheir application.

 

·                  *Results ofoperations*. This section provides our analysis of thesignificant line items on our unaudited condensed consolidated statement ofoperations for the three and six months ended June 30, 2010 compared tothe three and six months ended June 30, 2009.

 

·                  *Liquidityand capital resources*. This section provides an analysis of ourliquidity and cash flow and discussions of our outstanding debt and commitmentsand matters relating to our common stock.

 

·                  *Recentaccounting pronouncements*. This section provides information about newaccounting standards that have been issued but for which adoption is not yetrequired.

 

**EXECUTIVEOVERVIEW**

 

**BusinessOverview**

 

Bruker Corporation and itswholly-owned subsidiaries design, manufacture, service and market proprietarylife science and materials research systems based on its core technologyplatforms, including X-ray technologies, magnetic resonance technologies, massspectrometry technologies, optical emission spectroscopy and infrared and Ramanmolecular spectroscopy technologies. We sell a broad range of field analyticalsystems for chemical, biological, radiological, nuclear and explosive, orCBRNE, detection. We also develop and manufacture low temperature and hightemperature superconducting wire products and superconducting wire andsuperconducting devices for use in advanced magnet technology, physics researchand energy applications. Our diverse customer base includes life science,pharmaceutical, biotechnology and molecular diagnostic research companies,academic institutions, advanced materials and semiconductor industries andgovernment agencies. We maintain major technical and manufacturing centers inEurope, North America and Japan and we have sales offices located throughout 

 

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the world. Our corporateheadquarters are located in Billerica, Massachusetts.

 

Our business strategy is tocapitalize on our ability to innovate and generate rapid revenue performance,both organically and through acquisitions. Our revenue growth strategy,combined with anticipated improvements to our gross profit margins andincreased leverage on our research and development, sales and marketing anddistribution investments and general and administrative expenses, is expectedto enhance our operating margins and improve our earnings in the future.

 

On May 19, 2010, wecompleted our acquisition of three former Varian product lines which Agilentdivested in connection with obtaining regulatory approval for its May 14,2010 acquisition of Varian. The Company acquired certain assets and assumedcertain liabilities in Varian’s inductively coupled plasma mass spectrometryinstruments business, laboratory gas chromatography instruments business, andgas chromatography triple-quadrupole mass spectrometry instruments business(collectively, the “chemical analysis business”). The chemical analysisbusiness complements our existing mass spectrometry products and expands ourofferings to industrial and applied markets and provides opportunities tosupply customers with equipment packages that have a broader range ofapplications and value.

 

We are organized into fiveoperating segments, representing each of our five divisions: Bruker AXS, BrukerBioSpin, Bruker Daltonics, Bruker Optics and Bruker Energy & SuperconTechnologies. Bruker AXS is in the business of manufacturing and distributingadvanced X-ray, spark-optical emission spectroscopy and atomic force microscopyinstrumentation used in non-destructive molecular and elemental analysis.Bruker BioSpin is in the business of manufacturing and distributing enablinglife science tools based on magnetic resonance technology. Bruker Daltonics isin the business of manufacturing and distributing mass spectrometry instrumentsthat can be integrated and used along with other analytical instruments, aswell as our CBRNE detection products. Bruker Optics is in the business ofmanufacturing and distributing research, analytical and process analysisinstruments and solutions based on infrared and Raman molecular spectroscopytechnologies. Bruker Energy & Supercon Technologies is in the businessof developing and producing superconductivity-based materials and superconductivity-enableddevices.

 

We have combined the Bruker AXS,Bruker BioSpin, Bruker Daltonics and Bruker Optics operating segments into theScientific Instruments reporting segment because each has similar economiccharacteristics, product processes and services, types and classes ofcustomers, methods of distribution and regulatory environments. As such,management reports its results based on the following segments:

 

·                  *ScientificInstruments.*  The operations of this segment includethe design, manufacture and distribution of advanced instrumentation and automatedsolutions based on X-ray technology, spark-optical emission spectroscopytechnology, atomic force microscopy, magnetic resonance technology, massspectrometry technology and infrared and Raman molecular spectroscopytechnology. Typical customers of the Scientific Instruments segment includepharmaceutical, biotechnology and diagnostic companies; academic institutions;medical schools; other non-profit organizations; clinical microbiologylaboratories; government departments and agencies; nanotechnology,semiconductor, chemical, cement, metals and petroleum companies; and food,beverage and agricultural analysis companies and laboratories.

 

·                  *Energy &Supercon Technologies.*  The operations of this segmentinclude the development and marketing of superconducting andnon-superconducting materials and devices for growing markets in renewableenergy, energy infrastructure, healthcare and “big science” research. Thissegment supplies low temperature superconductors for use in magnetic resonanceimaging and nuclear magnetic resonance systems, fusion energy research andother applications, as well as high temperature superconductors which areprimarily used in fusion energy research. This segment also providessuperconductivity-enabled devices, such as magnets, accelerator cavities andmodules, radio frequency power couplers and linear accelerators, primarily foruse in fusion research and other scientific applications. In addition, thissegment has a number of devices and materials under development, including superconductingcrystal growth magnets for photovoltaic and semiconductor applications,inductive superconducting fault current limiters for energy infrastructureapplications and high temperature superconductors for compact high-power windturbine generators and other applications. Typical customers of theEnergy & Supercon Technologies segment include manufacturers ofmedical technology and life science analytics tools and universities anddedicated research facilities in the fields of material sciences, energy,biotechnology and proteomics, among others.

 

**FinancialOverview**

 

For the three months ended June 30,2010, our revenue increased by $48.4 million, or 19.2%, to $300.9 million,compared 

 

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to $252.5 million for thecomparable period in 2009. Included in this change in revenue is a decrease ofapproximately $5.9 million from the impact of foreign exchange due to thestrengthening of the U.S. Dollar versus the Euro and other foreign currenciesand an increase of approximately $3.7 million attributable to acquisition.Excluding the effect of foreign exchange and acquisition, revenue increased by$50.6 million, or 20.0%. The increase in revenue on an adjusted basis isattributable to both the Scientific Instruments segment, which increased by$44.5 million, or 18.4%, and the Energy & Supercon Technologiessegment, which increased by $5.6 million, or 40.9%. Revenue in the ScientificInstruments segment reflects an increase in sales of all of our coretechnologies, particularly in magnetic resonance, X-ray and mass spectrometry.Revenues in the Energy & Supercon Technologies segment increased dueto higher demand for low temperature superconducting wire.

 

For the six months ended June 30,2010, our revenue increased by $95.6 million, or 19.8%, to $578.6 million,compared to $483.0 million for the comparable period in 2009. Included in thischange in revenue is an increase of approximately $12.8 million from the impactof foreign exchange due to the weakening of the U.S. Dollar versus the Euro andother foreign currencies and $10.5 million attributable to acquisition.Excluding the effect of foreign exchange and acquisition, revenue increased by$72.3 million, or 15.0%. The increase in revenue on an adjusted basis isattributable to both the Scientific Instruments segment, which increased by$63.7 million, or 13.7%, and the Energy & Supercon Technologiessegment, which increased by $10.3 million, or 47.2%. Revenue in the ScientificInstruments segment reflects an increase in sales of all of our coretechnologies, particularly in magnetic resonance, X-ray and mass spectrometry.Revenues in the Energy & Supercon Technologies segment increased dueto higher demand for low temperature superconducting wire.

 

The mix of products sold inthe Scientific Instruments segment in the three and six months ended June 30,2010 reflects increased demand from academic, government and industrialcustomers. We attribute the increase in sales of magnetic resonance and massspectrometry products and spending by academic and government customers to ournew product introductions over the last twelve to eighteen months and tostimulus packages implemented by governments of various countries, includingthe U.S., Germany, Japan and China. The improvement in revenues from ourindustrial customers continues to reflect an ongoing improvement in thesemarkets. We remain optimistic that the industrial markets we serve willcontinue to improve but we will continue to monitor the recovery in thesemarkets. We are also monitoring the developments in academic and governmentresearch budgets, primarily in Europe. While many European governments haveannounced their intentions to reduce overall spending, we believe that fundingfor the majority of our products and markets will remain stable, or grow insome cases, in most of our key European markets.

 

Income from operations forthe three months ended June 30, 2010 was $37.9 million, resulting in anoperating margin of 12.6%, compared to income from operations of $20.2 million,resulting in an operating margin of 8.0%, for the comparable period in 2009.The increase in operating margin is primarily the result of the higher revenuedescribed above and the corresponding improvement in our gross profit margins.Our gross profit margin for the second quarter of 2010 was 45.1%, compared with44.0% for the comparable period in 2009. Higher gross profit margins resultedprimarily from changes in product mix, specifically an increase in revenuesfrom high-end instrumentation, including our newly introduced products whichwere designed to carry higher gross margins than our previous generations ofproducts and the weakening of the Euro, which favorably impacts our grossprofit margins as a majority of our production is performed in Europe. Theincrease in revenue allowed us to better utilize our production facilities andleverage our fixed production costs. The increase in revenue also allowed us toleverage our selling, general and administrative costs and our research anddevelopment costs, which decreased to 31.6% of revenue for the three monthsended June 30, 2010 compared with 36.2% of revenue for the comparableperiod of 2009.

 

Income from operations forthe six months ended June 30, 2010 was $64.8 million, resulting in anoperating margin of 11.2%, compared to income from operations of $34.5 million,resulting in an operating margin of 7.1%, for the comparable period in 2009.The increase in operating margin is primarily the result of higher revenuedescribed above and the corresponding improvement in our gross profit margins.Our gross profit margin as a percentage of revenue was 45.3% for the first halfof 2010 and 44.3% for the comparable period in 2009. Higher gross profitmargins resulted primarily from changes in product mix, specifically anincrease in revenues from high-end instrumentation, including our newlyintroduced products which were designed to carry higher gross margins than ourprevious generations of products. The increase in revenue allowed us to betterutilize our production facilities and leverage our fixed production costs. Theincrease in revenue also allowed us to leverage our selling, general and administrativecosts and our research and development costs, which decreased to 33.5% ofrevenue for the six months ended June 30, 2010 compared with 37.1% ofrevenue for the comparable period of 2009.

 

We incurred approximately$2.8 million of interest expense during the six months ended June 30, 2010compared to $4.4 

 

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million for the comparable period in 2009. Ofthe total interest expense incurred in the first half of 2010, approximately$2.4 million related to a credit facility that we entered into during the firstquarter of 2008. We initially borrowed $351.0 million under this creditfacility in order to finance the acquisition of Bruker BioSpin. In the firsthalf of 2010, we repaid approximately $9.4 million of the amounts outstandingunder this credit agreement and, from the inception of this agreement, we havereduced the net amount outstanding by approximately $229.1 million.

 

Our effective tax rate forthe three months ended June 30, 2010 was 32.0%, compared to 26.6% for thecomparable period in 2009. Our effective tax rate for the six months ended June 30,2010 was 35.5%, compared to 32.8% for the comparable period in 2009. The changein our effective tax rate relates primarily to the amount and mix of income andtaxes outside the U.S. because we are not able to record a tax benefit onlosses incurred in the U.S.

 

Our net income attributableto the shareholders of Bruker Corporation for the three months ended June 30,2010 was $22.6 million, or $0.14 per diluted share, compared to $12.9 million,or $0.08 per diluted share, for the comparable period in 2009. Our net incomeattributable to the shareholders of Bruker Corporation for the six months endedJune 30, 2010 was $38.7 million, or $0.23 per diluted share, compared to$21.3 million, or $0.13 per diluted share, for the comparable period in 2009.

 

**CRITICALACCOUNTING POLICIES**

 

This discussion and analysisof our financial condition and results of operations is based upon ourunaudited condensed consolidated financial statements, which have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America. The preparation of these financial statements requires thatwe make estimates and assumptions that affect the reported amounts of assetsand liabilities and the disclosure of contingent assets and liabilities at thedate of the financial statements and reported amounts of revenues and expensesduring the reporting period. On an ongoing basis, management evaluates itsestimates and judgments, including those related to revenue recognition, incometaxes, allowance for doubtful accounts, inventories, goodwill, other intangibleassets and long-lived assets, warranty costs and derivative financialinstruments. We base our estimates and judgments on historical experience,current market and economic conditions, industry trends and other assumptionsthat we believe are reasonable and form the basis for making judgments aboutthe carrying value of assets and liabilities that are not readily apparent fromother sources. Actual results could differ from these estimates.

 

We believe the followingcritical accounting policies to be both those most important to the portrayalof our financial position and results of operations and those that require themost subjective judgment.

 

*Revenuerecognition.*We recognize revenue from system sales whenpersuasive evidence of an arrangement exists, the price is fixed ordeterminable, title and risk of loss has been transferred to the customer andcollectability of the resulting receivable is reasonably assured. Title andrisk of loss generally are transferred to the customer upon receipt of a signedcustomer acceptance form for a system that has been shipped, installed, and forwhich the customer has been trained. As a result, the timing of customeracceptance or readiness could cause our reported revenues to differ materiallyfrom expectations. When products are sold through an independent distributor ora strategic distribution partner who assumes responsibility for installation,we recognize the system sale when the product has been shipped and title andrisk of loss have been transferred to the distributor. Our distributors do nothave price protection rights or rights of return; however, our products aretypically warranted to be free from defect for a period of one year. Revenue isdeferred until cash is received when collectability is not reasonably assured,such as when a significant portion of the fee is due over one year afterdelivery, installation and acceptance of a system. For arrangements withmultiple elements, we recognize revenue for each element based on the relativefair value of the elements, provided all other criteria for revenue recognitionhave been met. The fair value for each element provided in multiple elementarrangements is typically determined by referencing the prices charged when theelement is sold separately. If there is objective and reliable evidence of thefair value of the undelivered items in an arrangement, but no such evidence forthe delivered items, we use the residual method to allocate the arrangementconsideration. Changes in our ability to establish the fair value for eachelement in multiple element arrangements could affect the timing of revenuerecognition. Revenue from accessories and parts is recognized upon shipment andservice revenue is recognized as the services are performed. We also havecontracts for which we apply the percentage-of-completion method for revenuerecognition. Application of the percentage-of-completion method requires us tomake reasonable estimates of the extent of progress toward completion of thecontract and the total costs we will incur under the contract. Changes in ourestimates could affect the timing of revenue recognition. Grant revenue isrecognized when we complete the services required under the grant.

 

*Incometaxes.*The determination of income tax expense requires us to make certainestimates and judgments concerning 

 

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the calculation of deferredtax assets and liabilities, as well as the deductions, carryforwards andcredits that are available to reduce taxable income. Deferred tax assets andliabilities arise from differences in the timing of the recognition of revenueand expenses for financial statement and tax purposes. Deferred tax assets andliabilities are measured using the tax rates in effect for the year in whichthese temporary differences are expected to be settled. We estimate the degreeto which tax assets and loss carryforwards will result in a benefit based onexpected profitability by tax jurisdiction, and we provide a valuationallowance for tax assets and loss carryforwards that we believe will morelikely than not go unused. If it becomes more likely than not that a tax assetor loss carryforward will be used for which a reserve has been provided, wereverse the related valuation allowance. If our actual future taxable income bytax jurisdiction differs from estimates, additional allowances or reversals ofreserves may be necessary. In addition, we only recognize benefits for taxpositions that we believe are more likely than not of being sustained uponreview by a taxing authority with knowledge of all relevant information. Wereevaluate our uncertain tax positions on a quarterly basis and any changes tothese positions as a result of tax audits, tax laws or other facts andcircumstances could result in additional charges to operations.

 

*Allowancefor doubtful accounts.* We maintain allowances for doubtful accountsfor estimated losses resulting from the inability of our customers to payamounts due. If the financial condition of our customers were to deteriorate,reducing their ability to make payments, additional allowances would berequired, resulting in a charge to operations.

 

*Inventories.* Inventoriesare stated at the lower of cost or market, with costs determined by thefirst-in, first-out method for a majority of subsidiaries and by average costfor certain international subsidiaries. We record provisions to account forexcess and obsolete inventory to reflect the expected non-saleable ornon-refundable inventory based on an evaluation of slow moving products.Inventories also include demonstration units located in our demonstrationlaboratories or installed at the sites of potential customers. We consider our demonstrationunits to be available for sale. We reduce the carrying value of demonstrationinventories for differences between cost and estimated net realizable value,taking into consideration usage in the preceding twelve months, expecteddemand, technological obsolescence and other information including the physicalcondition of the unit. If ultimate usage or demand varies significantly fromexpected usage or demand, additional write-downs may be required, resulting inadditional charges to operations.

 

*Goodwill,other intangible assets and other long-lived assets.* We evaluatewhether goodwill is impaired annually and when events occur or circumstanceschange. We test goodwill for impairment at the reporting unit level (theoperating segment or one level below an operating segment). The performance ofthe test involves a two-step process. The first step of the impairment testinvolves comparing the fair values of the applicable reporting units with theiraggregate carrying values, including goodwill. We generally determine the fairvalue of our reporting units using an income approach methodology of valuationthat includes the discounted cash flow method. Estimating the fair value of thereporting units requires significant judgments by management about the futurecash flows. If the carrying amount of a reporting unit exceeds the fair valueof the reporting unit, we perform the second step of the goodwill impairmenttest to measure the amount of the impairment. In the second step of thegoodwill impairment test we compare the implied fair value of the reportingunit’s goodwill with the carrying value of that goodwill. We also reviewfinite-lived intangible assets and other long-lived assets when indication ofpotential impairment exists, such as a significant reduction in undiscountedcash flows associated with the assets. Should the fair value of our long-livedassets decline because of reduced operating performance, market declines, orother indicators of impairment, a charge to operations for impairment may benecessary.

 

*Warrantycosts.* We normally provide a one year parts and labor warranty with thepurchase of equipment. The anticipated cost for this warranty is accrued uponrecognition of the sale based on historical warranty rates and our assumptionsof future warranty claims. The warranty accrual is included as a currentliability on the consolidated balance sheets. Although our products undergoquality assurance and testing procedures throughout the production process, ourwarranty obligation is affected by product failure rates, material usage andservice delivery costs incurred in correcting a product failure. Although ouractual warranty costs have historically been consistent with expectations, tothe extent warranty claim activity or costs associated with servicing thoseclaims differ from our estimates, revisions to the warranty accrual may berequired.

 

*Derivativefinancial instruments.* All derivative instruments are recorded asassets or liabilities at fair value, which is calculated as an estimate of thefuture cash flows, and subsequent changes in a derivative’s fair value arerecognized in income, unless specific hedge accounting criteria are met.Changes in the fair value of a derivative that is highly effective anddesignated as a cash flow hedge are recognized in accumulated othercomprehensive income until the forecasted transaction occurs or it becomesprobable that the forecasted transaction will not occur. We perform anassessment at the inception of the hedge and on a quarterly basis thereafter,to determine whether our derivatives are highly effective in offsetting changesin the 

 

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value of the hedged items. Any changes in thefair value resulting from hedge ineffectiveness are immediately recognized asincome or expense.

 

**RESULTS OFOPERATIONS**

 

***Three Months Ended June 30, 2010 compared to the Three MonthsEnded June 30, 2009***

 

***Consolidated Results***

 

The following table presentsour results for the three months ended June 30, 2010 and 2009 (dollars inmillions, except per share data):

 
| ** **                                                                               | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                               | ** ** | **June 30,**      | ** ** |
| ** **                                                                               | ** ** | **2010**               | ** ** | **2009** | ** ** |
| Product  revenue                                                                         |       | $                      | 267.0      |   | $ | 222.9 |   |
| Service  revenue                                                                         |       | 32.5                   |       | 28.3 |   |
| Other  revenue                                                                           |       | 1.4                    |       | 1.3 |   |
| Total  revenue                                                                           |       | 300.9                  |       | 252.5 |   |
|                                                                                     |       |                   |       |   |   |
| Cost  of product revenue                                                                 |       | 149.1                  |       | 125.2 |   |
| Cost  of service revenue                                                                 |       | 16.1                   |       | 16.1 |   |
| Total  cost of revenue                                                                   |       | 165.2                  |       | 141.3 |   |
| Gross  profit                                                                            |       | 135.7                  |       | 111.2 |   |
|                                                                                     |       |                   |       |   |   |
| Operating  expenses:                                                                     |       |                   |       |   |   |
| Selling,  general and administrative                                                     |       | 64.0                   |       | 60.4 |   |
| Research  and development                                                                |       | 31.2                   |       | 31.1 |   |
| Amortization  of acquisition-related intangible assets                                   |       | 0.7                    |       | 0.5 |   |
| Other  charges (credits), net                                                            |       | 1.9                    |       | (1.0 | ) |
| Total  operating expenses                                                                |       | 97.8                   |       | 91.0 |   |
| Operating  income                                                                        |       | 37.9                   |       | 20.2 |   |
|                                                                                     |       |                   |       |   |   |
| Interest  and other income (expense), net                                                |       | (4.2                   | )          | (2.9 | ) |
| Income before income taxes  and noncontrolling interest in consolidated subsidiaries     |       | 33.7                   |       | 17.3 |   |
| Income  tax provision                                                                    |       | 10.8                   |       | 4.6 |   |
| Consolidated  net income                                                                 |       | 22.9                   |       | 12.7 |   |
| Net  income (loss) attributable to noncontrolling interest in consolidated  subsidiaries |       | 0.3                    |       | (0.2 | ) |
| Net  income attributable to Bruker Corporation                                           |       | $                      | 22.6       |   | $ | 12.9 |   |
|                                                                                     |       |                   |       |   |   |
| Net income per common  share attributable to Bruker Corporation shareholders:            |       |                   |       |   |   |
| Basic  and diluted                                                                       |       | $                      | 0.14       |   | $ | 0.08 |   |
|                                                                                     |       |                   |       |   |   |
| Weighted  average common shares outstanding:                                             |       |                   |       |   |   |
| Basic                                                                                    |       | 164.3                  |       | 163.3 |   |
| Diluted                                                                                  |       | 165.8                  |       | 164.7 |   |

 

***Revenue***

 

For the three months endedJune 30, 2010, our revenue increased by $48.4 million, or 19.2%, to $300.9million, compared to $252.5 million for the comparable period in 2009. Includedin this change in revenue is a decrease of approximately $5.9 million from theimpact of foreign exchange due to the strengthening of the U.S. Dollar versusthe Euro and other foreign currencies and an increase of approximately $3.7million attributable to acquisition. Excluding the effect of foreign exchange 

 

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and acquisition, revenueincreased by $50.6 million, or 20.0%. The increase in revenue on an adjustedbasis is attributable to both the Scientific Instruments segment, whichincreased by $44.5 million, or 18.4%, and the Energy & SuperconTechnologies segment, which increased by $5.6 million, or 40.9%. Revenue in theScientific Instruments segment reflects an increase in sales of all of our coretechnologies, particularly in magnetic resonance, X-ray and mass spectrometry.Revenues in the Energy & Supercon Technologies segment increased dueto higher demand for low temperature superconducting wire.

 

The mix of products sold inthe Scientific Instruments segment reflects increased demand from academic,government and industrial customers. We attribute the increase in sales ofmagnetic resonance and mass spectrometry products and spending by academic andgovernment customers to our new product introductions over the last twelve toeighteen months and to stimulus packages implemented by governments of variouscountries, including the U.S., Germany, Japan and China. The improvement inrevenues from our industrial customers continues to reflect an ongoingimprovement in these markets. We remain optimistic that the industrial marketswe serve will continue to improve but we will continue to monitor the recoveryin these markets. We are also monitoring academic and government researchbudgets, primarily in Europe. While many European governments have announcedtheir intentions to reduce overall spending, we believe that funding for themajority of our products and markets will remain stable, or grow in some cases,in most of our key European markets.

 

***Cost of Revenue***

 

Our cost of product andservice revenue for the three months ended June 30, 2010, was $165.2million, resulting in a gross profit margin of 45.1%, compared to cost ofproduct and service revenue of $141.3 million, resulting in a gross profitmargin of 44.0%, for the comparable period in 2009. Higher gross profit marginsresulted primarily from changes in product mix, specifically an increase inrevenues from high-end instrumentation, including our newly introduced productswhich were designed to carry higher gross margins than our previous generationsof products and the weakening of the Euro, which favorably impacts our grossprofit margins as a majority of our production is performed in Europe. Theincrease in revenue also allowed us to better utilize our production facilitiesand leverage our fixed production costs. We also reduced production coststhrough various cost saving initiatives.

 

***Selling, General and Administrative***

 

Our selling, general andadministrative expense for the three months ended June 30, 2010 increasedto $64.0 million, or 21.3% of revenue, from $60.4 million, or 23.9% of revenue,for the comparable period in 2009. The increase in selling, general andadministrative expense is attributable to increases in headcount in support ofour revenue growth and acquisitions. Increases in selling, general andadministrative expenses were offset, in part, by changes in foreign currencyexchange rates, primarily the Euro.

 

***Research and Development***

 

Our research and developmentexpense for the three months ended June 30, 2010 increased to $31.2million, or 10.4% of revenue, and was essentially flat compared with researchand development expense of $31.1 million, or 12.3% of revenue, for thecomparable period in 2009. Research and development expenses increased in thesecond quarter of 2010 compared with the second quarter of 2009 as a result ofincreases in headcount in support of new product development and acquisitions;however, these increases were offset by changes in foreign currency exchangerates, primarily the Euro, as the majority of our research and development ispreformed in Europe.

 

***Amortization of Acquisition-Related Intangible Assets***

 

Our amortization expensefrom acquisition-related intangible assets was $0.7 million for the threemonths ended June 30, 2010 compared with $0.5 million for the comparableperiod in 2009. The increase in amortization expense relates to intangibleassets acquired in connection with the chemical analysis business from Agilent.

 

***Other Charges (Credits), Net***

 

Other charges (credits), netof $1.9 million in the second quarter of 2010 related entirely to theScientific Instruments segment and include a loss of $1.0 million associatedwith the sale of our investment in Bruker Baltic Ltd., a manufacturing sitelocated in Riga, Latvia that was engaged in the production of certaincomponents used in our X-ray product lines. We 

 

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divested this business as part of our broadercorporate strategy of reducing costs and consolidating critical production andknow-how in certain key production sites. In addition, other charges (credits),net in the second quarter of 2010 includes $0.5 million of transition-relatedcosts and $0.4 million of acquisition-related costs incurred in connection withour acquisition of the chemical analysis business from Agilent.

 

Acquisition-related creditsof $(1.0) million in the second quarter of 2009 relate entirely to the Energyand Supercon Technologies segment and include a bargain purchase gain of $2.1million recorded in connection with the acquisition of the research instrumentsbusiness from Varian Medical Systems, Inc. offset, in part, by $0.4million of transaction costs incurred in connection with the acquisition of theresearch instruments business and $0.7 million of impairment charges associatedwith certain fixed assets used in the production of certain superconductingwire.

 

***Interest and Other Income (Expense), Net***

 

Interest and other income(expense), net during the three months ended June 30, 2010 was $(4.2)million, compared to $(2.9) million for the comparable period of 2009.

 

During the three monthsended June 30, 2010, the major components within interest and other income(expense), net were realized and unrealized losses on foreign currency transactionsof $2.4 million and net interest expense of $1.1 million. During thethree months ended June 30, 2009, the major component within interest andother income (expense), net, were net interest expense of $1.7 million andrealized and unrealized losses on foreign currency transactions of $0.7million.

 

The decrease in interestexpense is a function of lower outstanding debt, as we reduced our total debtby $11.0 million in the first half of 2010. Losses on foreign currency exchangerates in the second quarter of 2010 were primarily a function of changes inexchange rates between the Euro and the Swiss Franc.

 

***Income Tax Provision***

 

Our effective tax rategenerally reflects our tax provision for non-U.S. entities only since nobenefit was recognized for losses incurred in the U.S. We will maintain a fullvaluation allowance against all U.S. deferred tax assets, including our U.S.net operating losses and tax credits, until evidence exists that it is morelikely than not that the loss carryforward and credit amounts will be utilizedto offset U.S. taxable income. Our tax rate may change over time as the amountand mix of income and taxes outside the U.S. changes. The effective tax rate iscalculated using our projected annual pre-tax income or loss and is affected bytax credits, the expected level of other tax benefits, and the impact ofchanges to the valuation allowance, as well as changes in the mix of ourpre-tax income and losses among jurisdictions with varying statutory tax ratesand credits.

 

The income tax provision forthe three months ended June 30, 2010, was $10.8 million compared to $4.6million for the three months ended June 30, 2009, representing effectivetax rates of 32.0% and 26.6%, respectively. This change in our effective taxrate relates primarily to the amount and mix of income and taxes outside of theU.S.

 

***Net Income (Loss) Attributable to Noncontrolling Interests***

 

Net income (loss)attributable to noncontrolling interests for the three months ended June 30,2010 was $0.3 million compared to $(0.2) million for the comparable period of2009. Net income (loss) attributable to noncontrolling interests represents theminority shareholders’ proportionate share of the net income (loss) recorded byfive majority-owned indirect subsidiaries, Bruker Baltic Ltd., Bruker LabmatePvt. Ltd., InCoaTec GmbH and Perch Solutions OY, which are included in theScientific Instruments segment, and RI Research Instruments GmbH, which isincluded in the Energy & Supercon Technologies segment.

 

***Net Income Attributable to Bruker Corporation***

 

Our net income for the threemonths ended June 30, 2010, was $22.6 million, or $0.14 per diluted share,compared to $12.9 million, or $0.08 per diluted share for the comparable periodin 2009.

 

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***Segment Results***

 

***Revenue***

 

The following table presentsrevenue, change in revenue and revenue growth by reportable segment for thethree months ended June 30, 2010 and 2009 (dollars in millions):

 
| ** **                               | ** ** | **Three Months Ended June 30,** | ** ** | **Dollar** | ** ** | **Percentage** | ** ** |
|------------------------------------------|------------|-----------------------------------------------------|------------|------------|------------|----------------|------------|
| ** **                               | ** ** | **2010**                                            | ** ** | **2009**   | ** ** | **Change**     | ** ** | **Change** | ** ** |
| Scientific  Instruments                  |       | $                                                   | 284.9      |       | $          | 241.3          |       | $ | 43.6 |   | 18.1 | % |
| Energy &  Supercon Technologies |       | 18.1                                                |       | 13.7       |       | 4.4            |       | 32.1 | % |
| Eliminations  (a)                        |       | (2.1                                                | )          | (2.5       | )          | 0.4            |       |   |   |
|                                     |       | $                                                   | 300.9      |       | $          | 252.5          |       | $ | 48.4 |   | 19.2 | % |

 

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(a) Represents productand service revenue between reportable segments.

 

***Scientific Instruments Segment Revenues***

 

Scientific Instrumentssegment revenue increased by $43.6 million, or 18.1%, to $284.9 million for thethree months ended June 30, 2010, compared to $241.3 million for thecomparable period in 2009. Included in this change in revenue is a decrease ofapproximately $4.6 million from the impact of foreign exchange due to thestrengthening of the U.S. Dollar versus the Euro and other foreign currenciesand an increase of approximately $3.7 million attributable to acquisition.Excluding the effect of foreign exchange and acquisition, revenue increased by$44.5 million, or 18.4%. The increase in revenue, excluding the effect offoreign exchange and acquisition, reflects an increase in sales of all of ourcore technologies, particularly in magnetic resonance, X-ray and massspectrometry. The mix of products sold in the Scientific Instruments segmentreflects increased demand from academic, government and industrial customers.We attribute the increase in spending by academic and government customers tonew product introductions over the last twelve to eighteen months and stimuluspackages implemented by governments of various countries, including the U.S.,Germany, Japan and China. We also continued to benefit from improvements in theindustrial markets that we serve.

 

System revenue andaftermarket revenue as a percentage of total Scientific Instruments segmentrevenue were as follows during the three months ended June 30, 2010 and2009 (dollars in millions):

 
| ** **           | ** ** | **Three Months Ended June 30,** | ** ** |
|----------------------|------------|-----------------------------------------------------|------------|
| ** **           | ** ** | **2010**                                            | ** ** | **2009** | ** ** |
| ** **           | ** ** | **Revenue**                                         | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System  revenue      |       | $                                                   | 231.5      |   | 81.3 | % | $ | 191.3 |   | 79.3 | % |
| Aftermarket  revenue |       | 53.4                                                |       | 18.7 | % | 50.0 |   | 20.7 | % |
| Total  revenue       |       | $                                                   | 284.9      |   | 100.0 | % | $ | 241.3 |   | 100.0 | % |

 

System revenues in theScientific Instruments segment include X-ray systems, optical emissionspectroscopy systems, atomic force microscopy systems, nuclear magneticresonance systems, magnetic resonance imaging systems, electron paramagneticimaging systems, mass spectrometry systems, CBRNE detection systems andmolecular spectroscopy systems. Aftermarket revenues in the ScientificInstruments segment include accessory sales, consumables, training andservices.

 

***Energy & Supercon Technologies Segment Revenues***

 

Energy & SuperconTechnologies segment revenue increased by $4.4 million, or 32.1%, to $18.1million for the three months ended June 30, 2010, compared to $13.7million for the comparable period in 2009. Included in this change in revenueis a decrease of approximately $1.2 million from the impact of foreignexchange. Excluding the effect of foreign exchange, revenue increased by 40.9%.The increase in revenue was the result of higher demand for low temperaturesuperconducting wire.

 

System and wire revenue andaftermarket revenue as a percentage of total Energy & SuperconTechnologies segment revenue were as follows during the three months ended June 30,2010 and 2009 (dollars in millions):

 

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| ** **               | ** ** | **Three Months Ended June 30,** | ** ** |
|--------------------------|------------|-----------------------------------------------------|------------|
| ** **               | ** ** | **2010**                                            | ** ** | **2009** | ** ** |
| ** **               | ** ** | **Revenue**                                         | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System  and wire revenue |       | $                                                   | 17.6       |   | 97.2 | % | $ | 13.3 |   | 97.1 | % |
| Aftermarket  revenue     |       | 0.5                                                 |       | 2.8 | % | 0.4 |   | 2.9 | % |
| Total  revenue           |       | $                                                   | 18.1       |   | 100.0 | % | $ | 13.7 |   | 100.0 | % |

 

System and wire revenues inthe Energy & Supercon Technologies segment include low and hightemperature superconducting wire and superconducting devices, includingmagnets, linear accelerators and radio frequency cavities. Aftermarket revenuesin the Energy & Supercon Technologies segment include accessory sales.

 

***Income (Loss) from Operations***

 

The following table presentsincome (loss) from operations and operating margins on revenue by reportablesegment for the three months ended June 30, 2010 and 2009 (dollars inmillions):

 
| ** **                               | ** ** | **Three Months Ended June 30,** | ** ** |
|------------------------------------------|------------|-----------------------------------------------------|------------|
| ** **                               | ** ** | **2010**                                            | ** ** | **2009** | ** ** |
| ** **                               | ** ** | **Operating  Income (Loss)**                   | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Operating  Income (Loss)** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| Scientific  Instruments                  |       | $                                                   | 40.4       |   | 14.2 | % | $ | 20.4 |   | 8.5 | % |
| Energy &  Supercon Technologies |       | (1.7                                                | )          | (9.4 | )% | (0.7 | ) | (5.1 | )% |
| Corporate,  eliminations and other (a)   |       | (0.8                                                | )          |   |   | 0.5 |   |   |   |
| Total  operating income                  |       | $                                                   | 37.9       |   | 12.6 | % | $ | 20.2 |   | 8.0 | % |

 

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(a) Representscorporate costs and eliminations not allocated to the reportable segments.

 

Scientific Instrumentssegment income from operations for the three months ended June 30, 2010was $40.4 million, resulting in an operating margin of 14.2%, compared toincome from operations of $20.4 million, resulting in an operating margin of8.5%, for the comparable period in 2009. Income from operations in theScientific Instruments segment improved as a result of the higher revenuesdescribed above, an improvement in gross profit margins and a reduction inoperating expenses as a percentage of revenue.

 

In the second quarter of2010, gross profit margin as a percentage of revenue in the ScientificInstruments segment increased to 46.8% from 45.4% for the comparable period in2009. Higher gross profit margins resulted primarily from changes in productmix, specifically an increase in revenues from high-end instrumentation,including our newly introduced products which were designed to carry highergross margins than our previous generations of products and the weakening ofthe Euro, which favorably impacts our gross profit margins as a majority of ourproduction is performed in Europe. The increase in revenue also allowed us tobetter utilize our production facilities and leverage our fixed productioncosts. We also reduced production costs through various cost saving initiatives.

 

In the second quarter of2010, operating expenses, excluding other charges, in the ScientificInstruments increased to $91.1 million, or 32.0% of segment revenue, from $89.2million, or 37.0% of segment revenue for the comparable period in 2009. Thisincrease is a function of incremental investments in sales and marketingactivities and research and development activities that we believe willgenerate future growth offset, in part, by changes in foreign currency exchangerates.

 

Energy & SuperconTechnologies segment loss from operations for the three months ended June 30,2010 was $1.7 million, resulting in an operating margin of (9.4)%, compared toa loss from operations of $0.7 million, resulting in an operating margin of(5.1)%, for the comparable period in 2009. The loss from operations in thesecond quarter of 2009 

 

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included a bargain purchasegain of $2.1 million recorded in connection with the acquisition of theresearch instruments business from Varian Medical Systems, offset, in part, by$0.4 million of transaction costs incurred in connection with the acquisitionof the research instruments business and $0.7 million of impairment chargesassociated with certain fixed assets used in the production of certainsuperconducting wire. Excluding the effects of these net credits, the loss fromoperations in the second quarter of 2009 was $1.7 million, resulting in anoperating margin of (12.4)%. The improvement in operating loss, excluding thenet credit described above is a function of higher revenues and an improvementin gross margins.

 

***Six Months Ended June 30, 2010 compared to the Six Months Ended June 30,2009***

 

***Consolidated Results***

 

The following table presentsour results for the six months ended June 30, 2010 and 2009 (dollars inmillions, except per share data):

 
| ** **                                                                           | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                                           | ** ** | **June 30,**    | ** ** |
| ** **                                                                           | ** ** | **2010**             | ** ** | **2009** | ** ** |
| Product  revenue                                                                     |       | $                    | 511.0      |   | $ | 425.1 |   |
| Service  revenue                                                                     |       | 64.0                 |       | 55.2 |   |
| Other  revenue                                                                       |       | 3.6                  |       | 2.7 |   |
| Total  revenue                                                                       |       | 578.6                |       | 483.0 |   |
|                                                                                 |       |                 |       |   |   |
| Cost  of product revenue                                                             |       | 283.3                |       | 236.9 |   |
| Cost  of service revenue                                                             |       | 33.3                 |       | 32.2 |   |
| Total  cost of revenue                                                               |       | 316.6                |       | 269.1 |   |
| Gross  profit                                                                        |       | 262.0                |       | 213.9 |   |
|                                                                                 |       |                 |       |   |   |
| Operating  expenses:                                                                 |       |                 |       |   |   |
| Selling,  general and administrative                                                 |       | 129.7                |       | 118.9 |   |
| Research  and development                                                            |       | 64.0                 |       | 60.2 |   |
| Amortization  of acquisition-related intangible assets                               |       | 1.1                  |       | 0.9 |   |
| Other  charges (credits), net                                                        |       | 2.4                  |       | (0.6 | ) |
| Total  operating expenses                                                            |       | 197.2                |       | 179.4 |   |
| Operating  income                                                                    |       | 64.8                 |       | 34.5 |   |
|                                                                                 |       |                 |       |   |   |
| Interest  and other income (expense), net                                            |       | (4.5                 | )          | (2.8 | ) |
| Income  before income taxes and noncontrolling interest in consolidated subsidiaries |       | 60.3                 |       | 31.7 |   |
| Income  tax provision                                                                |       | 21.4                 |       | 10.4 |   |
| Consolidated  net income                                                             |       | 38.9                 |       | 21.3 |   |
| Net  income attributable to noncontrolling interest in consolidated subsidiaries     |       | 0.2                  |       | — |   |
| Net  income attributable to Bruker Corporation                                       |       | $                    | 38.7       |   | $ | 21.3 |   |
|                                                                                 |       |                 |       |   |   |
| Net  income per common share attributable to Bruker Corporation shareholders:        |       |                 |       |   |   |
| Basic                                                                                |       | $                    | 0.24       |   | $ | 0.13 |   |
| Diluted                                                                              |       | $                    | 0.23       |   | $ | 0.13 |   |
|                                                                                 |       |                 |       |   |   |
| Weighted  average common shares outstanding:                                         |       |                 |       |   |   |
| Basic                                                                                |       | 164.2                |       | 163.3 |   |
| Diluted                                                                              |       | 165.7                |       | 164.5 |   |

 

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***Revenue***

 

For the six months ended June 30,2010, our revenue increased by $95.6 million, or 19.8%, to $578.6 million,compared to $483.0 million for the comparable period in 2009. Included in thischange in revenue are increases of approximately $12.8 million from the impactof foreign exchange due to the weakening of the U.S. Dollar versus the Euro andother foreign currencies and $10.5 million attributable to acquisition.Excluding the effect of foreign exchange and acquisition, revenue increased by$72.3 million, or 15.0%. The increase in revenue on an adjusted basis isattributable to both the Scientific Instruments segment, which increased by$63.7 million, or 13.7%, and the Energy & Supercon Technologiessegment, which increased by $10.3 million, or 47.2%. Revenue in the ScientificInstruments segment reflects an increase in sales of all of our coretechnologies, particularly in magnetic resonance, X-ray and mass spectrometry.Revenues in the Energy & Supercon Technologies segment increased dueto higher demand for low temperature superconducting wire.

 

The mix of products sold inthe Scientific Instruments segment reflects increased demand from academic,government and industrial customers. We attribute the increase in sales ofmagnetic resonance and mass spectrometry products and spending by academic andgovernment customers to our new product introductions over the last twelve toeighteen months and to stimulus packages implemented by governments of variouscountries, including the U.S., Germany, Japan and China. The improvement inrevenues from our industrial customers continues to reflect an ongoingimprovement in these markets. We remain optimistic that the industrial marketswe serve will continue to improve but we will continue to monitor the recoveryin these markets. We are also monitoring the developments in academic andgovernment research budgets, primarily in Europe. While many Europeangovernments have announced their intentions to reduce overall spending, webelieve that funding for the majority of our products and markets will remainstable, or grow in some cases, in most of our key European markets.

 

***Cost of Revenue***

 

Our cost of product andservice revenue for the six months ended June 30, 2010, was $316.6million, resulting in a gross profit margin of 45.3%, compared to cost ofproduct and service revenue of $269.1 million, resulting in a gross profitmargin of 44.3%, for the comparable period in 2009. Higher gross profit marginsresulted primarily from changes in product mix, specifically an increase inrevenues from high-end instrumentation, including our newly introduced productswhich were designed to carry higher gross margins than our previous generationsof products. The increase in revenue also allowed us to better utilize ourproduction facilities and leverage our fixed production costs. We also reducedproduction costs through various cost saving initiatives.

 

***Selling, General and Administrative***

 

Our selling, general and administrativeexpense for the six months ended June 30, 2010 increased to $129.7million, or 22.4% of revenue, from $118.9 million, or 24.6% of revenue, for thecomparable period in 2009. The increase in selling, general and administrativeexpense is attributable to increases in headcount in support of our revenuegrowth and acquisitions. The increase in selling, general and administrativeexpense is also partly attributable to changes in foreign currency exchangerates, primarily the Euro.

 

***Research and Development***

 

Our research and developmentexpense for the six months ended June 30, 2010 increased to $64.0 million,or 11.1% of revenue, from $60.2 million, or 12.5% of revenue, for thecomparable period in 2009. We continue to make incremental investments inresearch and development projects that we believe will generate future growth.The increase in research and development expense is also partly attributable tochanges in foreign currency exchange rates, primarily the Euro, as a majorityof our research and development is performed in Europe.

 

***Amortization of Acquisition-Related Intangible Assets***

 

Our amortization expensefrom acquisition-related intangible assets was $1.1 million for the six monthsended June 30, 2010 compared with $0.9 million for the comparable periodin 2009. The increase in amortization expense relates to intangible assetsacquired in connection with the chemical analysis business from Agilent.

 

***Other Charges (Credits), Net***

 

Other charges (credits), netof $2.4 million in the first half of 2010 related entirely to the ScientificInstruments segment 

 

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and include a loss of $1.0million associated with the sale of our investment in Bruker Baltic Ltd., amanufacturing site located in Riga, Latvia that was engaged in the productionof certain components used in our X-ray product lines. In addition, we incurred$0.2 million of restructuring charges, which related primarily to severanceincurred in connection with closing a production facility in Herzogenrath,Germany. We incurred the loss on our investment and the restructuring chargesas part of our broader corporate strategy of reducing costs and consolidatingcritical production and know-how in certain key production sites. In addition,other charges (credits), net in the first half of 2010 includes $0.7 million ofacquisition-related costs and $0.5 million of transition-related costs incurredin connection with our acquisition of the chemical analysis business fromAgilent.

 

Acquisition-related creditsof $(0.6) million in the first half of 2009 relate entirely to the Energy andSupercon Technologies segment and include a bargain purchase gain of $2.1million recorded in connection with the acquisition of the research instrumentsbusiness from Varian Medical Systems, offset, in part, by $0.8 million oftransaction costs incurred in connection with the acquisition of the researchinstruments business and $0.7 million of impairment charges associated withcertain fixed assets used in the production of certain superconducting wire.

 

***Interest and Other Income (Expense), Net***

 

Interest and other income(expense), net during the six months ended June 30, 2010 was $(4.5)million, compared to $(2.8) million for the comparable period of 2009.

 

During the six months ended June 30,2010, the major components within interest and other income (expense), net werenet interest expense of $2.5 million and unrealized losses on foreign currencytransactions of $1.9 million. During the six months ended June 30, 2009,the major components within interest and other income (expense), net were netinterest expense of $3.6 million offset, in part, by realized and unrealized gainson foreign currency transactions of $0.6 million.

 

The decrease in interestexpense is a function of lower outstanding debt, as we reduced our total debtby $11.0 million in the first half of 2010. Losses on foreign currency exchangerates in the first half of 2010 were primarily a function of changes inexchange rates between the Euro and the Swiss Franc.

 

***Income Tax Provision***

 

Our effective tax rategenerally reflects our tax provision for non-U.S. entities only since nobenefit was recognized for losses incurred in the U.S. We will maintain a fullvaluation allowance against all U.S. deferred tax assets, including our U.S.net operating losses and tax credits, until evidence exists that it is morelikely than not that the loss carryforward and credit amounts will be utilizedto offset U.S. taxable income. Our tax rate may change over time as the amountand mix of income and taxes outside the U.S. changes. The effective tax rate iscalculated using our projected annual pre-tax income or loss and is affected bytax credits, the expected level of other tax benefits, and the impact ofchanges to the valuation allowance, as well as changes in the mix of ourpre-tax income and losses among jurisdictions with varying statutory tax ratesand credits.

 

The income tax provision forthe six months ended June 30, 2010, was $21.4 million compared to $10.4million for the six months ended June 30, 2009, representing effective taxrates of 35.5% and 32.8%, respectively. This change in our effective tax raterelates primarily to the amount and mix of income and taxes outside of the U.S.

 

***Net Income Attributable to Noncontrolling Interests***

 

Net income attributable tononcontrolling interests for the six months ended June 30, 2010 was $0.2million compared to $0.0 million for the comparable period of 2009. Net incomeattributable to noncontrolling interests represents the minority shareholders’proportionate share of the net income recorded by five majority-owned indirectsubsidiaries, Bruker Baltic Ltd., Bruker Labmate Pvt. Ltd., InCoaTec GmbHand Perch Solutions OY, which are included in the Scientific Instrumentssegment, and RI Research Instruments GmbH, which is included in theEnergy & Supercon Technologies segment.

 

***Net Income Attributable to Bruker Corporation***

 

Our net income for the sixmonths ended June 30, 2010, was $38.7 million, or $0.23 per diluted share,compared to $21.3 million, or $0.13 per diluted share for the comparable periodin 2009.

 

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***Segment Results***

 

***Revenue***

 

The following table presentsrevenue, change in revenue and revenue growth by reportable segment for the sixmonths ended June 30, 2010 and 2009 (dollars in millions):

 
| ** **                               | ** ** | **Six Months Ended June 30,** | ** ** | **Dollar** | ** ** | **Percentage** | ** ** |
|------------------------------------------|------------|------------------------------------|------------|------------|------------|----------------|------------|
| ** **                               | ** ** | **2010**                           | ** ** | **2009**   | ** ** | **Change**     | ** ** | **Change** | ** ** |
| Scientific  Instruments                  |       | $                                  | 545.2      |       | $          | 464.9          |       | $ | 80.3 |   | 17.3 | % |
| Energy &  Supercon Technologies |       | 38.8                               |       | 21.8       |       | 17.0           |       | 78.0 | % |
| Eliminations  (a)                        |       | (5.4                               | )          | (3.7       | )          | (1.7           | )          |   |   |
|                                     |       | $                                  | 578.6      |       | $          | 483.0          |       | $ | 95.6 |   | 19.8 | % |

 

----

(a) Represents productand service revenue between reportable segments.

 

***Scientific Instruments Segment Revenues***

 

Scientific Instrumentssegment revenue increased by $80.3 million, or 17.3%, to $545.2 million for thesix months ended June 30, 2010, compared to $464.9 million for thecomparable period in 2009. Included in this change in revenue is an increase ofapproximately $12.9 million from the impact of foreign exchange due to thestrengthening of the U.S. Dollar versus the Euro and other foreign currenciesand an increase of approximately $3.7 million attributable to acquisition.Excluding the effect of foreign exchange and acquisition, revenue increased by$63.7 million, or 13.7%. The increase in revenue, excluding the effect offoreign exchange and acquisition, reflects an increase in sales of all of ourcore technologies, particularly in magnetic resonance, X-ray and massspectrometry. The mix of products sold in the Scientific Instruments segmentreflects increased demand from academic, government and industrial customers.We attribute the increase in spending by academic and government customers tonew product introductions over the last twelve to eighteen months and stimuluspackages implemented by governments of various countries, including the U.S.,Germany, Japan and China. We also continued to benefit from improvements in theindustrial markets that we serve.

 

System revenue andaftermarket revenue as a percentage of total Scientific Instruments segmentrevenue were as follows during the six months ended June 30, 2010 and 2009(dollars in millions):

 
| ** **           | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------|------------|---------------------------------------------------|------------|
| ** **           | ** ** | **2010**                                          | ** ** | **2009** | ** ** |
| ** **           | ** ** | **Revenue**                                       | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System  revenue      |       | $                                                 | 437.9      |   | 80.3 | % | $ | 367.8 |   | 79.1 | % |
| Aftermarket  revenue |       | 107.3                                             |       | 19.7 | % | 97.1 |   | 20.9 | % |
| Total  revenue       |       | $                                                 | 545.2      |   | 100.0 | % | $ | 464.9 |   | 100.0 | % |

 

System revenues in theScientific Instruments segment include X-ray systems, optical emissionspectroscopy systems, atomic force microscopy systems, nuclear magneticresonance systems, magnetic resonance imaging systems, electron paramagneticimaging systems, mass spectrometry systems, CBRNE detection systems andmolecular spectroscopy systems. Aftermarket revenues in the ScientificInstruments segment include accessory sales, consumables, training andservices.

 

***Energy & Supercon Technologies Segment Revenues***

 

Energy & SuperconTechnologies segment revenue increased by $17.0 million, or 78.0%, to $38.8million for the six months ended June 30, 2010, compared to $21.8 millionfor the comparable period in 2009. Included in this change in revenue is anincrease of $6.8 million attributable to the research instruments business weacquired from Varian Medical Systems and a decrease of approximately $0.1million from the impact of foreign exchange. Excluding the effect ofacquisition and foreign exchange, revenue increased by $10.3 million, or 47.2%.The increase in revenue was the result of higher demand for low temperaturesuperconducting wire.

 

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System and wire revenue andaftermarket revenue as a percentage of total Energy & SuperconTechnologies segment revenue were as follows during the six months ended June 30,2010 and 2009 (dollars in millions):

 
| ** **               | ** ** | **Six Months Ended June 30,** | ** ** |
|--------------------------|------------|---------------------------------------------------|------------|
| ** **               | ** ** | **2010**                                          | ** ** | **2009** | ** ** |
| ** **               | ** ** | **Revenue**                                       | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Revenue** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| System  and wire revenue |       | $                                                 | 37.4       |   | 96.4 | % | $ | 20.9 |   | 95.9 | % |
| Aftermarket  revenue     |       | 1.4                                               |       | 3.6 | % | 0.9 |   | 4.1 | % |
| Total  revenue           |       | $                                                 | 38.8       |   | 100.0 | % | $ | 21.8 |   | 100.0 | % |

 

System and wire revenues inthe Energy & Supercon Technologies segment include low and hightemperature superconducting wire and superconducting devices, includingmagnets, linear accelerators and radio frequency cavities. Aftermarket revenuesin the Energy & Supercon Technologies segment include accessory sales.

 

***Income (Loss) from Operations***

 

The following table presentsincome (loss) from operations and operating margins on revenue by reportablesegment for the six months ended June 30, 2010 and 2009 (dollars inmillions):

 
| ** **                               | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                               | ** ** | **2010**                                          | ** ** | **2009** | ** ** |
| ** **                               | ** ** | **Operating  Income (Loss)**                 | ** ** | **Percentage of  Segment  Revenue** | ** ** | **Operating  Income (Loss)** | ** ** | **Percentage of  Segment  Revenue** | ** ** |
| Scientific  Instruments                  |       | $                                                 | 68.1       |   | 12.5 | % | $ | 36.5 |   | 7.9 | % |
| Energy &  Supercon Technologies |       | (2.2                                              | )          | (5.7 | )% | (3.1 | ) | (14.2 | )% |
| Corporate,  eliminations and other (a)   |       | (1.1                                              | )          |   |   | 1.1 |   |   |   |
| Total  operating income                  |       | $                                                 | 64.8       |   | 11.2 | % | $ | 34.5 |   | 7.1 | % |

 

----

(a) Representscorporate costs and eliminations not allocated to the reportable segments.

 

Scientific Instrumentssegment income from operations for the six months ended June 30, 2010 was$68.1 million, resulting in an operating margin of 12.5%, compared to incomefrom operations of $36.5 million, resulting in an operating margin of 7.9%, forthe comparable period in 2009. Income from operations in the ScientificInstruments segment improved as a result of the higher revenues described aboveand an improvement in gross profit margins and a reduction in operatingexpenses as a percentage of revenue.

 

In the first half of 2010,gross profit margin as a percentage of revenue in the Scientific Instrumentssegment increased to 46.9% from 45.4% for the comparable period in 2009. Highergross profit margins resulted primarily from changes in product mix,specifically an increase in revenues from high-end instrumentation, includingour newly introduced products which were designed to carry higher gross marginsthan our previous generations of products. The increase in revenue also allowedus to better utilize our production facilities and leverage our fixedproduction costs. We also reduced production costs through various cost savinginitiatives.

 

In the first half of 2010,operating expenses, excluding other charges, in the Scientific Instrumentsincreased to $185.4 million, or 34.0% of segment revenue, from $174.5 million,or 37.5% of segment revenue for the comparable period in 2009. This increase isa function of incremental investments in sales and marketing activities andresearch and development activities that we believe will generate futuregrowth. To a lesser degree, changes in foreign currency exchange ratescontributed to the increase in operating expenses.

 

Energy & SuperconTechnologies segment loss from operations for the six months ended June 30,2010 was $2.2 million, 

 

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resulting in an operatingmargin of (5.7)%, compared to a loss from operations of $3.1 million, resultingin an operating margin of (14.2)%, for the comparable period in 2009. The lossfrom operations in the first half of 2009 included a bargain purchase gain of$2.1 million recorded in connection with the acquisition of the researchinstruments business from Varian Medical Systems, offset, in part, by $0.8million of transaction costs incurred in connection with the acquisition of theresearch instruments business and $0.7 million of impairment charges associatedwith certain fixed assets used in the production of certain superconductingwire. Excluding the effects of these net credits, the loss from operations inthe first half of 2009 was $3.7 million, resulting in an operating margin of(17.0)%. The improvement in operating loss, excluding the net credit describedabove is a function of higher revenues and an improvement in gross margins.

 

**LIQUIDITYAND CAPITAL RESOURCES**

 

We currently anticipate thatour existing cash and credit facilities will be sufficient to support ouroperating and investing needs for at least the next twelve months, but thisdepends on our profitability and our ability to manage working capitalrequirements. Our future cash requirements will also be affected byacquisitions that we may make in the future. Historically, we have financed ourgrowth through cash flow generation and a combination of debt financings andissuances of common stock. In the future, there are no assurances thatadditional financing alternatives will be available to us if required, or ifavailable, will be obtained on terms favorable to us.

 

During the six months ended June 30,2010, net cash provided by operating activities was $53.1 million, resultingprimarily from $51.9 million of consolidated net income adjusted for non-cashitems and $1.2 million of net changes in working capital. During the six monthsended June 30, 2009, net cash provided by operating activities was $51.3million, resulting primarily from $34.8 million of net income adjusted fornon-cash items and $16.5 million of net changes in working capital.

 

During the six months ended June 30,2010, net cash used by investing activities was $48.5 million, compared tonet cash used by investing activities of $8.2 million during the sixmonths ended June 30, 2009. Cash used by investing activities during thesix months ended June 30, 2010 was attributable to $37.8 million used foracquisitions and $10.7 million of capital expenditures. Cash used by investingactivities during the six months ended June 30, 2009 was attributable to$7.1 million of capital expenditures and $1.1 million used foracquisitions. Capital expenditures during the six months ended June 30,2010 were at a level consistent with our planned capital spending of $20.0million to $30.0 million in 2010.

 

During the six months ended June 30,2010, net cash used by financing activities was $8.9 million, compared tonet cash used by financing activities of $52.1 million during the sixmonths ended June 30, 2009. Cash used by financing activities during thesix months ended June 30, 2010 and June 30, 2009 was primarilyattributable to $10.3 million and $51.7 million, respectively, of net debtrepayments under various long-term and short-term arrangements.

 

At June 30, 2010, wehad outstanding debt totaling $126.7 million consisting of $121.9 millionoutstanding under the  term loancomponent of the Credit Agreement and $4.8 million under capital leaseobligations. At December 31, 2009, we had outstanding debt totaling $137.7million consisting of $131.3 million outstanding under the term loan componentof the Credit Agreement, $0.3 million outstanding under other long-term debtarrangements, $0.1 million outstanding under other revolving lines of creditand $6.0 million under capital lease obligations.

 

In February 2008, weentered into a credit agreement with a syndication of lenders, which we referto as the Credit Agreement. The Credit Agreement provides a revolving creditline with a maximum commitment of $230.0 million and a term loan facility of$150.0 million. The outstanding principal and interest under the term loan ispayable in quarterly installments through December 2012. Borrowings underthe Credit Agreement bear interest, at our option, at either (i) thehigher of the prime rate or the federal funds rate plus 0.50%, or(ii) adjusted LIBOR, plus margins ranging from 0.40% to 1.25% and afacility fee ranging from 0.10% to 0.20%. As of June 30, 2010, theweighted average interest rate of borrowings under the term facility of theCredit Agreement was approximately 2.7%.

 

Borrowings under the CreditAgreement are secured by the pledge to the banks of 100% of the capital stockof each of our wholly-owned domestic subsidiaries and 65% of the capital stockof certain of our wholly-owned direct or indirect foreign subsidiaries. TheCredit Agreement also requires that we maintain certain financial ratiosrelated to maximum leverage and minimum interest coverage, as defined in theCredit Agreement. Specifically, our leverage ratio cannot exceed 3.0 and ourinterest coverage ratio cannot be less than 3.0. In addition to the financialratios, the Credit Agreement restricts, among other 

 

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things, our ability to dothe following: make certain payments; incur additional debt; incur certainliens; make certain investments, including derivative agreements; merge,consolidate, sell or transfer all or substantially all of our assets; and enterinto certain transactions with affiliates. Our failure to comply with any ofthese restrictions or covenants may result in an event of default under theapplicable debt instrument, which could permit acceleration of the debt underthat instrument and require us to prepay that debt before its scheduled duedate. As of June 30, 2010, the latest measurement date, we were incompliance with the covenants of the Credit Agreement.

 

In addition to revolvingloans under the Credit Agreement, we have other revolving loans with variousfinancial institutions located primarily in Germany, Switzerland and France.The following is a summary of the maximum commitments and net amounts availableto the Company under revolving loans as of June 30, 2010 (in millions):

 
| ** **             | ** ** | **Weighted  Average  Interest Rate** | ** ** | **Total Amount  Committed by  Lenders** | ** ** | **Outstanding  Borrowings** | ** ** | **Outstanding  Letters of  Credit** | ** ** | **Total Amount  Available** | ** ** |
|------------------------|------------|-------------------------------------------|------------|---------------------------------------------------|------------|-----------------------------|------------|------------------------------------------|------------|----------------------------------|------------|
| Credit  Agreement      |       | —                                    | %          | $                                                 | 230.0      |                        | $          | —                                   |       | $                                | 1.4        |   | $ | 228.6 |   |
| Other  revolving loans |       | —                                    | %          | 90.7                                              |       | —                      |       | 76.5                                     |       | 14.2                             |       |
| Total  revolving loans |       |                                      |       | $                                                 | 320.7      |                        | $          | —                                   |       | $                                | 77.9       |   | $ | 242.8 |   |

 

As of June 30, 2010, wehad approximately $4.1 million of net operating loss carryforwards available toreduce future U.S. taxable income. However, these losses are severely limited in terms of their use. TheCompany also has approximately $49.0 million of German Trade Tax net operatinglosses that are carried forward indefinitely and U.S. tax credits of approximately$4.4 million available to offset future tax liabilities that expire at variousdates. U.S. tax credits, after the filing of the 2008 U.S. Federal tax returnin September 2009, include foreign tax credits of $2.5 million expiring invarious years through 2019 and research and development tax credits of $1.8million expiring at various dates through 2025 and other credits of $0.1million. These operating losses and tax credit carryforwards may be subject tolimitations under provisions of the Internal Revenue Code.

 

The following tablesummarizes maturities for our significant financial obligations as of June 30,2010 (in millions):

 
| **Contractual Obligations**           | ** ** | **Total** | ** ** | **Less than 1  Year** | ** ** | **1-3 Years** | ** ** | **4-5 Years** | ** ** | **More than 5  Years** | ** ** |
|--------------------------------------------|------------|-----------|------------|---------------------------------|------------|--------------------|------------|--------------------|------------|----------------------------------|------------|
| Long-term  debt, including current portion |       | $         | 126.7      |                            | $          | 25.1               |       | $                  | 99.4       |                             | $          | 1.4 |   | $ | 0.8 |   |
| Derivative  liabilities                    |       | 8.8       |       | 6.5                             |       | 2.3                |       | —             |       | —                           |       |
| Uncertain  tax contingencies               |       | 24.3      |       | —                          |       | 24.3               |       | —             |       | —                           |       |
|                                            |            |           |            |                                 |            |                    |            |                    |            |                                  |            |  |  |  |  |  |

 

Uncertain tax contingenciesare positions taken or expected to be taken on an income tax return that mayresult in additional payments to tax authorities. The total amount of uncertaintax contingencies is included in the “1-3 Years” column as we are not able toreasonably estimate the timing of potential future payments. If a tax authorityagrees with the tax position taken or expected to be taken or the applicablestatute of limitations expires, then additional payments will not be necessary.

 

***Nasdaq Compliance***

 

Collin J. D’Silva, a formerindependent member of our Board of Directors and the Board’s Audit Committee,voluntarily resigned from service on the Audit Committee, effectiveMarch 9, 2010, and from service on the Board, effective March 31,2010, in connection with joining the Company as President of the newly-formedChemical Analysis Division of Bruker Daltonics. On March 24, 2010, wenotified Nasdaq that due to the vacancy on our Audit Committee created byMr. D’Silva’s resignation from the Audit Committee, we were no longer incompliance with Nasdaq Listing Rule 5605 (“Rule 5605”), which requiresthat the Audit Committee be comprised of at least three members, each of whomis independent. On March 25, 2010, we received notice from Nasdaq advisingthat, as a result of Mr. D’Silva’s resignation from the Audit Committee,we were not in compliance with Rule 5605 and confirming that we wereprovided a cure period until September 7, 2010 to regain compliance.Additionally, on April 1, 2010, we received notice from Nasdaq that, dueto the resignation of Mr. D’Silva from our Board, we were not in compliancewith the majority independent director requirements set forth inRule 5605. Nasdaq provided a cure period until September 27, 2010 toregain compliance with the majority independence requirements. On August 2,2010, our Board of Directors appointed Charles F. Wagner, Jr. as anindependent director. Mr. Wagner has also 

 

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become a member of the Board’sAudit Committee. With the appointment of Mr. Wagner to the Board ofDirectors and the Board’s Audit Committee, we are in compliance with themajority independent director requirements and the audit committee requirementsin Rule 5605.

 

**RECENTACCOUNTING PRONOUNCEMENTS**

 

In September 2009, theEmerging Issues Task Force, or EITF, reached consensus on FASB AccountingStandards Update 2009-14,*Software (Topic985)—Certain Revenue Arrangements That Include Software Elements*.FASB Accounting Standards Updates 2009-14 changes the accounting model forrevenue arrangements that include both tangible products and software elements.Under this guidance, tangible products containing software components andnon-software components that function together to deliver the tangible product’sessential functionality are excluded from the software revenue guidance inSubtopic No. 985-605,*Software-RevenueRecognition.* In addition, hardware components of a tangible productcontaining software components are always excluded from the software revenueguidance. FASB Accounting Standards Updates 2009-14 is effective prospectivelyfor revenue arrangements entered into or materially modified in fiscal yearsbeginning on or after June 15, 2010. However, early adoption is permitted.We are currently assessing the impact that this update will have on our resultsof operations and financial position and when we will adopt these requirements.

 

In September 2009, theEITF reached consensus on FASB Accounting Standards Update 2009-13,*Revenue Recognition (Topic 605)—Multiple-DeliverableRevenue Arrangements*. FASB Accounting Standards Update 2009-13addresses the accounting for multiple-deliverable arrangements to enablevendors to account for products or services separately rather than as acombined unit. Specifically, this guidance amends the criteria in SubtopicNo. 605-25,*RevenueRecognition-Multiple-Element Arrangements,* for separatingconsideration in multiple-deliverable arrangements. This guidance establishes aselling price hierarchy for determining the selling price of a deliverable,which is based on: (a) vendor-specific objective evidence;(b) third-party evidence; or (c) estimates. This guidance alsoeliminates the residual method of allocation and requires that arrangement considerationbe allocated at the inception of the arrangement to all deliverables using therelative selling price method. In addition, this guidance significantly expandsrequired disclosures related to a vendor’s multiple-deliverable revenuearrangements. FASB Accounting Standards Update 2009-13 is effectiveprospectively for revenue arrangements entered into or materially modified infiscal years beginning on or after June 15, 2010, however, early adoptionis permitted. We are currently assessing the impact that this update will haveon our results of operations and financial position and when we will adoptthese requirements.

 

**ITEM 3.****                 ****QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

 

We are exposed to marketrisks associated with changes in foreign exchange rates and interest rates. Weselectively use financial instruments to reduce these risks. All transactionsrelated to risk management techniques are authorized and executed pursuant toour policies and procedures. Analytical techniques used to manage and monitorforeign exchange and interest rate risk include market valuations andsensitivity analysis.

 

***Impact of Foreign Currencies***

 

We generate a substantialportion of our revenues in international markets, principally Europe and Japan,which subjects our operations to the exposure of exchange rate fluctuations.The impact of currency exchange rate movement can be positive or negative inany period. Our costs related to sales in foreign currencies are largelydenominated in the same respective currencies, limiting our transaction riskexposure. However, for sales not denominated in U.S. Dollars, if there is anincrease in the rate at which a foreign currency is exchanged for U.S. Dollars,it will require more of the foreign currency to equal a specified amount of U.S.Dollars than before the rate increase. In such cases, if we price our productsin the foreign currency, we will receive less in U.S. Dollars than we didbefore the rate increase went into effect. If we price our products in U.S.Dollars and competitors price their products in local currency, anincrease in the relative strength of the U.S. Dollar could result in our pricesnot being competitive in a market where business is transacted in the localcurrency.

 

Our net foreign exchangegains (losses), net were $(1.9) million and $0.6 million for the sixmonths ended June 30, 2010 and 2009, respectively. From time to time, weenter into foreign currency contracts in order to minimize the volatility thatfluctuations in exchange rates have on our cash flows related to purchases andsales denominated in foreign currencies. We will continue to evaluate ourcurrency risks and in the future may utilize foreign currency contracts morefrequently as part of a transactional hedging program.

 

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***Impact of Interest Rates***

 

We may invest excess cash inshort-term investments that are subject to changes in interest rates. Webelieve that the market risk arising from holding these financial instrumentsis minimal.

 

Our exposure related toadverse movements in interest rates is derived primarily from outstandingfloating rate debt instruments that are indexed to short-term market rates. Ourobjective in managing our exposure to interest rates is to decrease thevolatility that changes in interest rates might have on our earnings and cashflows. To achieve this objective we entered into an interest rate swap. InApril 2008, we entered into an interest rate swap arrangement to pay afixed rate of approximately 3.8% and receive a variable rate based on threemonth LIBOR through December 31, 2012. The initial notional amount of thisinterest swap was $90.0 million and amortizes in proportion to the termdebt component of our Credit Agreement. At June 30, 2010, the outstandingnotional amount of this swap was $73.1 million. We have determined that thisswap is an effective hedge of the variability of cash flows of the interestpayments. At June 30, 2010, a 10% increase or decrease in the average costof our outstanding variable rate debt would not result in a material change inpre-tax interest expense.

 

***Inflation***

 

We do not believe inflationhad a material impact on our business or operating results during any of theperiods presented.

 

**ITEM 4.****                 ****CONTROLS AND PROCEDURES**

 

We have establisheddisclosure controls and procedures that are designed to ensure that materialinformation relating to us, including our consolidated subsidiaries, is madeknown to our Chief Executive Officer (principal executive officer) and ChiefFinancial Officer (principal financial officer) by others within ourorganization. Under the supervision and with the participation of ourmanagement, including our Chief Executive Officer and Chief Financial Officer,we conducted an evaluation of the effectiveness of our disclosure controls andprocedures as of June 30, 2010. Based on this evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that our disclosurecontrols and procedures were effective, as of June 30, 2010, to ensurethat the information required to be disclosed by us in the reports that we fileor submit under the Securities Exchange Act of 1934 is recorded, processed,summarized and reported within the time periods specified in the SEC’srules and forms.

 

There were no changes in ourinternal control over financial reporting that occurred during the quarterended June 30, 2010 that materially affected, or are reasonably likely toaffect, our internal control over financial reporting.

 

**PART II****                ****OTHER INFORMATION**

 

**ITEM 1.****                 ****LEGAL PROCEEDINGS**

 

Except as set forth belowthere have been no material changes to the legal proceedings disclosed inPart I, “Item 3. Legal Proceedings” in our Annual Report on Form 10-Kfor the year ended December 31, 2009 and our Quarterly Report on Form 10-Qfor the quarter ended March 31, 2010.

 

As previously reported, in November 2008a former employee of Bruker Corporation filed a complaint with theMassachusetts Commission Against Discrimination (“MCAD”) alleging agediscrimination. The Company responded to an information request from the MCADon April 23, 2010. The MCAD recently found probable cause in this matterand has scheduled a conciliation conference for November 1, 2010. TheCompany believes the complaint made by the former employee to be without meritand intends to defend the matter vigorously.

 

**ITEM 1A.****              ****RISK FACTORS**

 

In addition to the otherinformation set forth in this report, you should carefully consider the factorsdiscussed in Part I, “Item 1A. Risk Factors” in our Annual Report onForm 10-K for the year ended December 31, 2009, which couldmaterially affect our business, financial condition or future results. Therisks described in this report and in our Annual Report on Form 10-K arenot the only risks facing our Company. Additional risks and uncertainties notcurrently known to us or that we 

 

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currently deem to beimmaterial also may materially adversely affect our business, financialcondition and/or operating results.

 

There have been no materialchanges to the risk factors previously disclosed in our Annual Report onForm 10-K for the fiscal year ended December 31, 2009.

 

**ITEM 2.****                 ****UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

 

None.

 

**ITEM 3.****                 ****DEFAULTS UPON SENIOR SECURITIES**

 

None.

 

**ITEM 4.****                 ****[REMOVED AND RESERVED]**

 

**ITEM 5.****                 ****OTHER INFORMATION**

 

None.

 

**ITEM 6.****                 ****EXHIBITS**

 
| **Exhibit********No.** | ** ** | **Description**                                                                                                                                                                               |
|------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1                   |       | Bruker Corporation 2010  Incentive Compensation Plan Form of Incentive Stock Option Agreement(1)                                                                                              |
| 10.2                   |       | Bruker Corporation 2010  Incentive Compensation Plan Form of Non-Qualified Stock Option Agreement(1)                                                                                          |
| 10.3                   |       | Bruker Corporation 2010  Incentive Compensation Plan Form of Restricted Stock Agreement(1)                                                                                                    |
| 31.1                   |       | Certification by Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002(1)                                                                                  |
| 31.2                   |       | Certification by Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002(1)                                                                                  |
| 32.1                   |       | Certification by Chief  Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002(2) |

 

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(1)   Filed herewith.

(2)   Furnished herewith.

 

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**SIGNATURES**

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 

 
|                      | BRUKER CORPORATION |
|---------------------------|--------------------|
|                      |               |   |
| Date: August 9, 2010 | By:                | /s/ FRANK H. LAUKIEN,  PH.D. |
|                      |               | Frank H. Laukien, Ph.D.  President, Chief Executive Officer and Chairman  (Principal Executive Officer) |
|                      |               |   |
| Date: August 9, 2010 | By:           | /s/ BRIAN P. MONAHAN |
|                      |               | Brian P. Monahan  Chief Financial Officer  (Principal Financial Officer) |

 

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